Context:
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The International Monetary Fund (IMF), in its Article IV Consultation Report, has assigned India’s national accounts statistics (including GDP and GVA) a ‘C’ grade.
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The assessment points to methodological weaknesses and an outdated base year, impacting the quality of macroeconomic surveillance.
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The issue has implications for economic policymaking, governance, and global credibility of Indian data.
Key Highlights:
IMF Assessment Findings
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National Accounts (GDP & GVA): Assigned ‘C’ grade
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Indicates shortcomings in data quality that somewhat hamper effective surveillance.
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Consumer Price Index (CPI): Assigned ‘B’ grade
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Data broadly adequate but with notable limitations.
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Methodological Concerns
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Outdated base year:
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GDP and CPI still use 2011–12 base year.
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Deflators issue:
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Continued reliance on Wholesale Price Index (WPI) as deflators.
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CPI basket limitations:
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Items basket and weights may not reflect current consumption patterns.
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Data Compilation Issues
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Discrepancies between:
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Production approach and Expenditure approach of GDP estimation.
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Informal sector coverage remains inadequate.
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Lack of seasonally adjusted data in quarterly national accounts.
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Scope for improvement in statistical techniques.
Government Response
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Ministry of Statistics and Programme Implementation (MoSPI) is working on:
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Updating base years
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Improving methodology
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New GDP and CPI series expected by early or mid-2026.
Other Data Sets
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Government finance statistics – ‘B’ grade
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External sector statistics – ‘B’ grade
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Weaknesses have remained broadly unchanged from last year.
Relevant Prelims Points:
Issue
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IMF concerns over quality, reliability, and representativeness of India’s macroeconomic data.
Causes
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Outdated base year (2011–12)
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Limited expenditure-side GDP data
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Heavy reliance on WPI deflators
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Poor informal sector estimation
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Absence of seasonal adjustment
Government Initiatives
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MoSPI-led revision of base year
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Planned methodological overhaul
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Alignment with international statistical standards
Benefits of Data Reform
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More accurate GDP & inflation measurement
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Better policy formulation
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Improved global investor confidence
Challenges
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Capturing informal economy
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Frequent structural changes in consumption patterns
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Data collection in a large, diverse economy
Impact
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Affects macroeconomic surveillance
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Influences monetary & fiscal policy decisions
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Impacts India’s credibility in global institutions
Relevant Mains Points:
Key Facts & Definitions
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GDP (Gross Domestic Product):
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Total monetary value of all final goods and services produced within a country.
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GVA (Gross Value Added):
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Output value minus intermediate consumption.
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CPI (Consumer Price Index):
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Measures retail inflation using a weighted consumer basket.
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IMF Article IV Consultation:
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Annual review of a country’s economic policies and data.
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Conceptual & Static Linkages
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Importance of base year revision to reflect:
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Structural shifts
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Technological changes
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Consumption diversification
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Role of deflators in converting nominal to real values.
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Informal sector significance in developing economies like India.
Governance & Institutional Issues
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Statistical independence and transparency
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Capacity of national statistical systems
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Harmonisation with UN System of National Accounts (SNA)
Way Forward
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Timely revision of GDP and CPI base years
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Shift from WPI-based deflators to more representative indices
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Strengthen expenditure-side GDP data
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Improve informal sector estimation
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Introduce seasonally adjusted quarterly data
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Invest in digital data collection & big data analytics
UPSC Relevance (GS-wise):
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GS 2 (Governance): Quality of public data, institutional capacity, transparency
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GS 3 (Economy): GDP, inflation, macroeconomic indicators, statistical reforms
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Prelims: Definitions, base year, IMF reports
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Mains: Data credibility, economic governance, reforms in statistical systems