GROSS VALUE ADDED (GVA) (Syllabus: GS Paper 3 – Economy)

Context: Concerns about GDP data were addressed with the release of Q1 FY25 figures, showing a 5.7% year-on-year growth in India's GDP. Notably, the gap between GDP growth and gross value added (GVA) growth narrowed to 5.8% for the same period.

Gross Value Added (GVA)

• About: It is an economic productivity metric that measures the contribution of a corporate subsidiary, company, or municipality to an economy, producer, sector, or region.
• Calculation: GVA=GDP+SP−TP

oWhere: SP= Subsidies on products and TP= Taxes on products

• ​GVA Focus: GVA is specific to a particular sector, indicating its production contribution.
• Relationship Between GDP and GVA
• GDP Derivation: The GDP is derived by looking at the GVA data.
• Mathematical Relation: The GDP and GVA are related by the equation: GDP = (GVA) + (Taxes earned by the government) — (Subsidies provided by the government).
• Impact of Taxes and Subsidies: If the taxes earned by the government are more than the subsidies it provides, the GDP will be higher than GVA.