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

News-CRUX-10     9th September 2024        
QEP Pocket Notes

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.
QEP Pocket Notes