GDP Base Year Revision

Context:

The Ministry of Statistics and Programme Implementation (MoSPI) has initiated the process to revise the base year for India’s GDP calculations from 2011–12 to 2022–23. Key economic indicators like the Consumer Price Index (CPI) and Index of Industrial Production (IIP) will also be rebased accordingly.

What is a Base Year?

• A base year is a reference year used for measuring economic indicators such as GDP, inflation, IIP, and CPI.
• The index value is set to 100 for the base year, and subsequent values are measured relative to it.
• Purpose:
  • Eliminates the effects of inflation
  • Allows consistent comparison of economic growth across years

Example:
If GDP in the base year 2011–12 was ₹100 lakh crore and rose to ₹150 lakh crore in 2021–22, then GDP grew by 50% over the base year.

Proposed Update

• New GDP base year: 2022–23 (replacing 2011–12)
• Other indices to be updated: CPI, IIP, WPI
• Expected release of revised GDP series: February 27, 2026

 Advisory Committee

• A 26-member Advisory Committee on National Accounts Statistics has been constituted.
• Chairperson: Prof. Biswanath Goldar
• Mandate:
  • Identify new and relevant data sources
  • Recommend methodological improvements
  • Ensure alignment of GDP estimates with indices like WPI, CPI, and IIP

Why Revise the Base Year?

1. To Reflect Structural Changes in the Economy:
   • Captures changes in sectoral composition, consumption trends, and emergence of new industries (e.g., digital economy).
2. Relevance for Policymaking:
   • An updated base ensures better alignment with current economic realities, improving the effectiveness of macroeconomic planning.
3. Improved Data Sources:
   • New and more granular data available through:
     • GST filings
     • Corporate financial statements
     • Satellite data and real-time analytics
4. Global Best Practices:
   • Periodic revisions are in line with the UN System of National Accounts (SNA) standards followed internationally.