India to Update GDP Base Year to Fiscal 2023
India is on the brink of a significant change in how it calculates its national economic performance. The country’s base year for determining its gross domestic product (GDP) will be updated to fiscal year 2023 from the current fiscal year 2012, as Minister for Statistics Rao Inderjit Singh announced in Parliament.
To facilitate this transition, an advisory committee on national accounts statistics has been assembled. This panel, comprising representatives from both federal and state governments, as well as the central bank, is tasked with identifying new data sources and advising on the appropriate methodology for the revised GDP series.
The decision to update the base year stems from observations by numerous private economists, who have pointed out that the current GDP estimates, grounded in a base year that is over a decade old, do not adequately reflect the substantial structural changes that have occurred in the economy. These changes include the significant rise of digital platforms and the lasting effects of the COVID-19 pandemic.
The government has projected that it will begin releasing GDP and consumer price index (CPI) data according to the new series, starting in early 2026. This update is anticipated to provide a more accurate picture of the nation’s economic landscape.
As of the latest reports, India’s economic growth had decelerated more than anticipated, registering a year-on-year growth rate of 5.4% in the three months ending September 2024. This slowdown was largely attributed to weaker performance in manufacturing and consumption sectors, thereby increasing pressure on the central bank to contemplate interest rate reductions.
The revision of the GDP base year to fiscal 2023 is seen as a crucial move in capturing the dynamic shifts of the Indian economy, ensuring that economic policies and strategies are aligned with current economic realities. By doing so, policymakers aim to provide a more robust framework for assessing economic conditions and crafting informed economic decisions.
Overall, these changes are expected to yield a clearer and more comprehensive understanding of India’s economic standing, allowing for better planning and policy-making in the years to follow.
