New GDP Series (Base Year 2022–23)

Introduction

The Ministry of Statistics and Programme Implementation (MoSPI) has released a new series of Annual and Quarterly National Accounts with the base year updated to 2022–23, replacing the earlier 2011–12 series. This marks a significant improvement in the measurement of Gross Domestic Product (GDP) by incorporating updated data and refined methodologies.

Key Highlights of the New GDP Series

Growth Performance

The revised estimates show that the Indian economy remains strong. Real GDP is projected to grow at 7.6% in FY 2025–26, while earlier years recorded growth rates of 7.2% (2023–24) and 7.1% (2024–25).
At the same time, nominal GDP growth is estimated at 8.6% in FY 2025–26, although it is lower than previous estimates due to methodological changes.

Quarterly Growth Trends

Economic performance in 2025–26 is largely driven by strong quarterly growth, particularly in the second quarter (8.4%) and third quarter (7.8%), indicating sustained economic momentum.

Sectoral Performance

The manufacturing sector has emerged as a key driver of growth, achieving double-digit growth in multiple years after rebasing.
In addition, the secondary and tertiary sectors have recorded growth rates above 9%, contributing significantly to overall economic expansion.

Within services, the sector comprising trade, repair, hotels, transport, and communication has performed exceptionally well, recording a growth rate of 10.1%, highlighting strong service-sector activity.

Demand-Side Strength

On the demand side, both Private Final Consumption Expenditure (PFCE) and Gross Fixed Capital Formation (GFCF) have grown by more than 7%, reflecting robust consumption and investment demand.

2. Reasons for Revising the Base Year to 2022–23

Post-Pandemic Normal Year

The year 2022–23 was chosen because it represents a stable, post-pandemic economic environment. Earlier years were affected by COVID-19 disruptions such as lockdowns and supply chain issues, making them unsuitable for comparison.

Capturing Structural Changes

The Indian economy has undergone significant transformation over the past decade. The rise of the digital economy, gig employment, renewable energy, and platform-based services has changed production and consumption patterns. Rebasing allows these changes to be properly reflected.

Improved Data Sources

The new series incorporates high-quality and high-frequency data, including:

• GST data for manufacturing and services

• Surveys such as ASUSE and PLFS

• e-Vahan portal for transport-related consumption

• PFMS data for government expenditure

This reduces reliance on proxies and ensures greater accuracy and timeliness.

Methodological Improvements

The revision introduces important methodological upgrades:

• Double deflation, which improves real GDP estimation by separately adjusting input and output prices

• Adoption of the Supply and Use Table (SUT) framework, aligned with the
  System of National Accounts 2008, ensuring consistency in national accounts

• Better estimation of consumption (PFCE) using updated classifications and mixed data sources

• Improved allocation of value added across sectors, especially for multi-activity firms

3. Implications of the New GDP Series

Reduction in Nominal GDP

One of the most important outcomes is that nominal GDP has been reduced by 3–4%, affecting key macroeconomic ratios.

Impact on Fiscal Deficit

Since fiscal deficit is measured as a percentage of GDP, a lower GDP leads to a higher deficit ratio. For example, the 2025–26 fiscal deficit rises slightly under the new series.

Rising Debt-to-GDP Ratio

A smaller GDP base results in a higher debt-to-GDP ratio, making fiscal consolidation more challenging and requiring stronger growth efforts.

Challenges for $4 Trillion Economy Goal

India’s GDP is estimated at around $3.8 trillion in 2025–26, and reaching the $4 trillion target will require sustained high growth and favorable exchange rates, leaving little margin for error.

Sectoral Realignments

The revision has led to better estimation of agriculture, increasing its size by around 5%, reflecting improved data and methodology.

Measures to Further Advance India’s Economic Measurement Framework

Introduction

With the revision of GDP to the 2022–23 base year, India has significantly improved its statistical system. However, further reforms are needed to enhance accuracy, global comparability, and inclusiveness in economic measurement.

1. Introduction of Producer Price Index (PPI)

One of the most important reforms required is the introduction of a Producer Price Index (PPI). Currently, India relies mainly on the Consumer Price Index (CPI) and Wholesale Price Index (WPI). However, these do not fully capture price changes from the producer’s perspective.

The introduction of PPI, as recommended by the B.N. Goldar Committee, will provide a more accurate measure of price changes received by producers. This will improve deflation techniques in GDP estimation and align India with global best practices.

2. Expediting Revision of Wholesale Price Index (WPI)

Another key measure is to update the base year of the Wholesale Price Index (WPI). Since WPI is widely used as a deflator in national accounts, an outdated base year can distort GDP estimates.

Timely revision will ensure that price indices reflect current market conditions, thereby improving the reliability of real GDP calculations.

3. Alignment with Global Standards (SNA 2025)

India must prepare to adopt the upcoming
System of National Accounts 2025, which is expected to be implemented globally by 2029–30.

This will require building robust data systems to measure emerging areas such as:

• Digital economy

• Crypto assets

• Environmental and green accounting

Such alignment will enhance international comparability and credibility of India’s statistics.

4. Addressing Large-Firm Bias in Data

At present, GDP estimation relies heavily on corporate data from large firms, particularly from filings with the Ministry of Corporate Affairs. This may lead to overestimation of large firms’ contribution and underrepresentation of MSMEs, many of which do not report regularly.

Therefore, improved methodologies and data collection mechanisms are needed to better capture the contribution of small and informal enterprises, ensuring a more balanced and realistic GDP estimate.

Key Economic Concepts (Quick Understanding)

Gross Domestic Product (GDP)

GDP refers to the total value of final goods and services produced within a country during a specific period. It is a key indicator used to assess economic growth and living standards. India follows the
System of National Accounts 2008 framework for GDP estimation.

Base Year and Rebasing

The base year is the reference year used to calculate real GDP. Rebasing is the process of updating this base year to reflect current economic conditions and improve accuracy.

Quarterly GDP Estimation

The National Statistical Office estimates quarterly GDP using the Benchmark-Indicator method, where annual data serves as a benchmark and high-frequency indicators are used to estimate short-term trends.

Gross State Domestic Product (GSDP)

GSDP measures the total economic output of a state. It is compiled by states following guidelines issued by the NSO to ensure uniformity.

Supply and Use Tables (SUTs)

The Supply and Use Table (SUT) framework ensures that total supply equals total use in the economy. This helps balance production, consumption, and income data, improving consistency in GDP estimation.

Conclusion

To further strengthen India’s economic measurement system, reforms such as introducing PPI, updating WPI, aligning with SNA 2025, and improving MSME data coverage are essential. These steps will enhance the accuracy, inclusiveness, and global credibility of India’s national accounts.