The Indian government is planning to update the base year for calculating its Gross Domestic Product (GDP) from 2011-12 to 2022-23. This decision is expected to align India’s economic indicators more accurately with the current economic realities, as significant structural changes have occurred over the past decade.
The Ministry of Statistics and Programme Implementation (MoSPI) is leading the charge, leveraging updated data sources such as the GST (Goods and Services Tax) database and newer household surveys like the Household Consumption Expenditure Survey (HCES). These new data inputs aim to provide a more comprehensive understanding of the informal sector and modern economic activities, ensuring that the country’s growth trajectory is measured more precisely.
Why Change the Base Year?
The base year, currently set at 2011-12, no longer reflects modern consumption patterns or the rapidly evolving technological landscape. Products like VCRs and lanterns, once key in calculating household spending, will be replaced with modern goods such as smartphones and smartwatches. This shift ensures that the new GDP figures will better reflect present-day consumer behavior and business activities.
Moreover, the use of GST data will enhance the representation of informal and service sectors, which make up a large portion of India’s economy. By incorporating the GST Network (GSTN) as a major data source, the government aims to capture previously under-reported sectors and improve data accuracy.
What to Expect?
The recalibration of the base year is expected to be completed by early 2026, with preliminary estimates available by February 2026. As part of the process, various surveys and studies are being conducted to update the economic ratios and rates used in GDP calculations. These include ongoing pilot surveys like the Annual Survey of Service Sector Enterprises (ASSSE), which will help provide a detailed breakdown of sector-specific growth.
The updated GDP figures, once released, could portray a more robust and accurate picture of India’s economic health. With improved data governance and survey methodologies, these figures are likely to reflect the significant strides made in the Indian economy, especially in sectors like technology, e-commerce, and services.
Impact on Policy and Economy
A change in the GDP base year will influence fiscal policy, investment strategies, and how India’s economic growth is perceived globally. For policymakers, updated GDP data will offer better insights into which sectors require more investment and support, particularly as the government continues its efforts to stimulate post-pandemic economic recovery.
For businesses, the new GDP estimates could result in a shift in market expectations, with sectors like technology, digital services, and modern retail showing stronger growth figures. Additionally, the change may improve India’s standing in global economic rankings, attracting more foreign investments.
Credit:
This article is based on information from NDTV.
Summary:
- The Indian government plans to change the base year for GDP calculation from 2011-12 to 2022-23.
- New data sources like GST and updated household surveys will be incorporated to reflect current economic realities.
- The recalibration is expected to be completed by early 2026, with preliminary estimates due in February 2026.
- The updated GDP figures will likely present a more accurate picture of India’s economic growth, especially in modern sectors like technology and services.
