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Budget 2022 | What is Real Economic Growth Rate?

Last Updated 26 January 2022, 09:42 IST

It is that time of the year when the nation gears up for the annunal exercise of Union Budget presentation. Finance Minister Nirmala Sitharaman will present the Budget 2022 on February 1 and share the report card of the economy.

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, how your buying power has been imapcted 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, and it is also used to compare one economy with another, and to compare the current economic growth rate to the previous periods.

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(Published 26 January 2022, 09:06 IST)

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