Published on: December 3, 2024

INDIA TO UPDATE GDP BASE YEAR

INDIA TO UPDATE GDP BASE YEAR

NEWS – The base year for calculating GDP is set to change from 2011-12 to 2022-23, as announced by the Minister of State for Statistics and Programme Implementation, Rao Inderjit Singh. This update is aimed at better reflecting economic realities, especially post-pandemic structural shifts and the rise of digital platforms.

HIGHLIGHTS

Formation of Advisory Committee

  • Advisory Committee on National Accounts Statistics (ACNAS):
    • A 26-member committee chaired by Biswanath Goldar.
    • Includes representatives from the Centre, states, Reserve Bank of India (RBI), and academia.
    • Tasked with identifying new data sources and revising GDP computation methodology.
  • Objectives of ACNAS:
    • Standardize data structures for harmonized quality reporting.
    • Use administrative data to improve statistical accuracy.

Implementation Timeline

  • The revised GDP and Consumer Price Index (CPI) data using the updated base year is expected to be released by early 2026.

Significance of Updating the Base Year

  • Why Update the Base Year?
    • The current base year of 2011-12 is outdated and fails to capture recent economic trends.
    • Reflects changes in consumption patterns, technology, and post-pandemic economic dynamics.
  • Methodology:
    • The base year serves as a reference to measure economic growth, holding all values constant for comparison.

Current Economic Scenario

  • GDP Slowdown:
    • India’s GDP growth decelerated to 4% year-on-year in the July-September 2024 quarter, marking a seven-quarter low.
    • Declines attributed to weaker manufacturing, reduced consumption, and mining sector contraction.
  • Comparison to Previous Quarters:
    • Q1 FY25 growth: 8%
    • Q2 FY25 growth: 4%

Steps to Strengthen Statistical Systems

  • Government Initiatives:
    • Constitution of ACNAS.
    • Revitalization of statistical coordination between the Centre and states.
    • Standardization of data structures and enhanced use of administrative data.
  • Focus on Surveys:
    • Plans to increase the frequency of the Periodic Labour Force Survey (PLFS), which tracks employment and unemployment trends.

Updates in Other Indices

  • A 22-member panel is revising the base year for the Wholesale Price Index (WPI) and other key indices, updating commodity weights and reflecting producer prices more accurately.