Context: Recently, the Ministry of Statistics and Programme Implementation (MoSPI) has released the First Advance Estimates (FAE) for the financial year 2020-21.

About First Advance Estimates (FAE) of Gross Domestic Product (GDP)

• The first instance of provisions of regular estimates of GDP for any financial year by MoSPI is called as FAE.
• The FAE for any particular financial year is typically presented on 7th January.
• The FAE of GDP are based on the benchmark-indicator method. 

Significance

• The Union Finance Ministry uses these GDP estimates to decide the next financial year’s Budget allocations.

Key- terms mentioned in FAE
GDP Growth Rate

• GDP is the monetary value of all finished goods and services made within a country during a specific period.
• FAE noticed 7.7 per cent contraction in GDP for 2020-21.

Absolute level of real GDP

• Real GDP is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year.
• Real GDP in absolute value is called as Absolute level of real GDP.
• India’s GDP is likely to be Rs 134.4 lakh crore for 2020-21.

GDP Per Capita

• GDP per capita is a measure of a country's economic output that accounts for its number of people.
• It divides the country's gross domestic product by its total population.
• India’s per capita GDP will fall to Rs 99, 155 in 2020-21.

Absolute level of real Gross Value Added (or GVA)

• GVA provides a proxy for the income earned by people involved in the various sectors.
• It maps the value-added by different sectors of the economy such as agriculture, industry and services.
• It provides a picture of the economy from the supply side.
• India’s real GVA level will fall below at Rs 123.4 lakh crore for 2020-21.

Absolute level of Private Final Consumption Expenditure (PFCE)

• The Private Final Consumption Expenditure (PFCE) is defined as the expenditure incurred by the resident households and non-profit institutions serving households (NPISH) on final consumption of goods and services, whether made within or outside the economic territory.
• PFCE constitutes over 56% of the total GDP.

Per capita PFCE

• Per capita PFCE shows how much does an average Indian spend in his/her private capacity. 
• Per capita PFCE fall below at Rs 55,609 for 2020-21.

Absolute level of Gross Fixed Capital Formation (GFCF)

• GFCF measures all the expenditures on goods and services that businesses and firms make as they invest in their productive capacity.
• It accounts for close to 28% of India’s GDP.
• It is the second biggest component of GDP after PFCF.