Budget 2023 | What is Real Economic Growth Rate?

It is used by the policymakers while deciding the fiscal policies, and to compare one economy with another

Union Finance Minister Nirmala Sitharaman will present the Union Budget on February 1, sharing the report card on the country's economy and the government's plans going forward. This comes after data from the National Statistical Office (NSO) estimates a slowdown in India's GDP growth to 7 per cent in the financial year 2022-23.

One indicator of a nation's growth is the Real Economic Growth Rate.

The economic growth rate is expressed in percentage that shows a rate of change in the country's Gross Domestic Product (GDP). GDP is the market value of all the goods and services produced in a country in a particular time period. A nation's economic growth is measured by the rate at which a nation's GDP changes in a particular year.

The real economic growth rate, however, takes into account the effects of inflation, that is to say how a consumer's buying power has been impacted by price changes. This is the reason it is considered to be a better measure of growth rate than the nominal growth rate.

It is used by the policymakers while deciding the fiscal policies, to compare one economy with another, and to compare the current economic growth rate to the previous periods.