Real growth, but not really.

"The National Statistical Office (NSO) has projected the Indian economy to grow at 7.3% in 2023-24 - higher than the Reserve Bank of India's (RBI) estimate of 7% - assuming an investment-led recovery in the world's fifth largest economy." "In FY23, GDP expanded 7.2%." BS. Curiously, "Lower-than-estimated nominal gross domestic product (GDP) in FY24, as pegged in the first advance estimate, will make it harder for the Centre to meet its targeted 5.9% fiscal deficit ratio," as "The nominal GDP for FY24 is estimated at Rs 296,57,745 crore (Rs 296.577 trillion), which is up 8.9% from a year before but it's lower than the budgeted Rs 301,75,065 crore (Rs 301.75 trillion). So, the government will have to contain its fiscal deficit, in absolute terms, at Rs 17,49,807 crore (Rs 17.498 trillion), against the budgeted Rs 17,86,816 crore (Rs 17.868 trillion) to be able to meet the 5.9% fiscal deficit target relative to nominal GDP." ET. How is it that the real GDP has increased by a much better-than-expected 7.3% while the nominal GDP is below that expected in the budget, even though it increased by 8.9%? Real GDP, or GDP at constant prices, is calculated by adjusting Nominal GDP, or GDP at current prices, for the rise in prices by using a GDP deflator relative to a base year which is taken at 100. Khan Academy. According to the Ministry of Statistics and Programme Implementation (MoSPI), "GDP deflator in India increased to 172.60 in 2024 from 170.20 points in 2023," an increase of 2.40 points. Trading Economics. Does that mean that the budget expected prices to rise much faster in 2023-24, thus inflating the nominal GDP? That would explain why, "RBI governor Shaktikanta Das has said that the central bank managed to moderate inflation without compromising on its growth focus," (TOI) when consumer price (CPI) inflation has been way above the RBI mandate of 4% since the beginning of the financial year on 1 April 2023. (RI). The rate of CPI inflation, as per the RBI, "For Q3FY24 (September-December), the projection has been slightly lowered to 5.4% from 5.6%. The forecast for Q4FY24 (January-March) remains unchanged at 5.2%." Mint. This is still way above the 4% mandate for the RBI (ET) but the governor considers it a sterling success. Was the RBI instructed to maintain an even higher inflation level? However, "While the government's tax revenue does not necessarily grow at the same rate as nominal GDP, they generally move in the same direction." Money-control. But this year tax collections have grown much faster than nominal GDP because of huge corporate profits due to lower input costs. Even so, there seems some doubt about meeting the fiscal deficit. While the GDP has grown more than expected, it has not grown as expected. "Curiouser and curiouser."