4th December 2024 (16 Topics)
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India to revise Base Year
The Government of India will revise the base year for calculating Gross Domestic Product (GDP) from 2011-12 to 2022-23, marking the first update in over a decade.
What is base year?
- The base year is a benchmark for calculating GDP by eliminating the effects of inflation, allowing for a comparison of economic growth over time.
- Updating the base year is crucial because it ensures that GDP data reflects the latest economic activities, consumption patterns, and industry contributions.
- The shift from 2011-12 to 2022-23 is particularly relevant because the Indian economy has undergone substantial transformations over the past decade.
- New sectors have emerged
- Digitalisation has accelerated
- Economy has adapted to post-pandemic realities
- This change aims to better reflect the structural shifts in India’s economy and provide a more accurate foundation for economic policymaking.
- A 26-member Advisory Committee on National Accounts Statistics (ACNAS), chaired by economist Biswanath Goldar, will oversee the transition.
- The GDP base year of 2011-12 was fixed in January 2015 when the Central Statistics Office (CSO), now part of the Ministry of Statistics and Programme Implementation (MoSPI), revised the base year for calculating national accounts.
- This extends beyond GDP to include updates for the Consumer Price Index (CPI), Index of Industrial Production (IIP), Wholesale Price Index (WPI), and Producer Price Index (PPI).
- The new GDP series is scheduled for rollout in February FY26 and will encompass key estimates, including the FY26 Q3 estimate, FY26 second advance estimate, FY25 first revised estimate, and FY24 second revised estimate.
- Similarly, a revised CPI series for inflation will be introduced in February FY26, followed by an updated IIP series in March FY26. These revisions aim to provide a more accurate reflection of the economy’s structural and sectoral shifts.
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