Finance Minister Nirmala Sitharaman announced Wednesday that the government will revise the base year for calculating Gross Domestic Product (GDP) to fiscal year 2022-23. This update from the current base year of 2011-12 aims to better reflect the significant economic changes and structural reforms that have occurred in the Indian economy, particularly in the post-pandemic era. The revised data is expected to be released on February 27th, 2026.
The decision to revise the GDP base year is driven by the need to capture the evolving structure of the Indian economy. The existing 2011-12 base year no longer adequately represents the current economic realities, especially considering the impact of the COVID-19 pandemic and subsequent policy reforms. The new base year will account for shifts in the contribution of various sectors, such as the increasing share of healthcare in GDP, and the impact of policy changes like the Goods and Services Tax (GST) and Production Linked Incentive (PLI) schemes.
The Ministry of Statistics and Programme Implementation (MoSPI) is overseeing the revision process. In June 2024, MoSPI established a 26-member Advisory Committee on National Accounts Statistics (ACNAS) to decide on the base year for GDP data, under the chairmanship of Biswanath Goldar. The committee includes representatives from the Central and State Governments, the Reserve Bank of India (RBI), academia, and researchers. The ACNAS is responsible for identifying new data sources and advising on the methodology for compiling national accounts statistics in the revised series. The committee is expected to complete the revision by early 2026.
A GDP base year serves as a reference point for measuring a country's annual economic growth and overall economic size. The base year's GDP is used as a benchmark to compute the growth of subsequent years. Updating the base year involves incorporating new industries, removing outdated ones, adopting better data sources and methods, and ensuring a more accurate measurement of real economic growth after adjusting for inflation. Ideally, the base year should be updated every 5 to 10 years to ensure that national accounts reflect the most recent data. The base year should be a normal year, free from abnormal incidents such as droughts, floods, earthquakes, or pandemics.
This revision will be the eighth update to the GDP base year, with previous revisions undertaken to keep pace with the changing economic landscape. By aligning the GDP with other key macroeconomic indicators such as the Wholesale Price Index (WPI), Consumer Price Index (CPI), and Index of Industrial Production (IIP), the government aims to provide a more accurate and comprehensive picture of the Indian economy. The base year for the Index of Industrial Production (IIP) will also be revised to 2022-23, while the base year for the Consumer Price Index will be revised to 2023-24.
