GDP Base Year Revised to 2022-23 | 19 Jun 2025

Source: IE  

Why in News? 

The Ministry of Statistics and Programme Implementation (MoSPI) announced that the government is revising the Gross Domestic Product (GDP) base year from 2011-12 to 2022-23. The revised data will be released on 27th February 2026.  

• The base year for Index of Industrial Production (IIP) will also be revised to 2022-23 while the base year for Consumer Price Index will be revised to 2023-24. 

What is the GDP Base Year? 

• About GDP Base Year: GDP is the key metric for measuring a country’s annual economic growth or its overall economic size, and the “base year” serves as the reference point for these calculations.  
  • Currently, 2011-12 is the base year, meaning the GDP of 2011-12 is used as the benchmark to compute the growth of subsequent years. 
• Need: The base year revision ensures the inclusion of new industries, removal of outdated ones, adoption of better data sources and methods, and more accurate measurement of real economic growth after adjusting for inflation. 
• Features: The base year should be a normal year i.e., it must not experience any abnormal incidents such as droughts, floods, earthquakes, pandemic, etc. Also, it should not be too distant in the past. 
  • The base year should ideally be updated every 5 to 10 years to ensure national accounts reflect the most recent data.  
• Frequency of  GDP Base Year Revision: The upcoming 2026 revision will be the eighth base year update, following seven earlier revisions, starting from 1948-49 to 1960-61 in August 1967 and most recently from 2004-05 to 2011-12 on 30th January 2015. 
  • The first national income estimates for India were compiled by the National Income Committee (chaired by P.C. Mahalanobis) in 1949. 
• 2017-18 Base Year Update Deferred: The plan to revise the base year to 2017-18 was dropped due to: 
  • Data quality concerns in Periodic Labour Force Survey (PLFS) (showed 45-year high unemployment). 
  • Rejection of Consumer Expenditure Survey (CES) 2017-18 data (indicated rising poverty). 
  • Impact of demonetisation (2016) and Goods and Services Tax (GST) introduction (2017) and Covid-19 made  the subsequent years abnormal for economic assessment. 

What is the Rationale Behind GDP Base Year Revisions? 

• Reflects Structural Changes in the Economy: India’s economy has shifted from agrarian-dominated (pre-1990s) to services-led (now 55% of GDP), requiring a new base year to reflect these changes. 
  • It ensures inclusion of emerging sectors like digital services, gig economy, renewable energy, and reassessment or exclusion of declining industries like traditional manufacturing. 
• Improves Data Accuracy & Methodology: Better data sources, such as MCA-21 for the corporate sector, replace outdated surveys, and updates align with UN System of National Accounts (SNA) guidelines. 
  • Informal sector estimates (e.g., small traders, MSMEs) are revised using fresh NSSO and PLFS data.  
• Removes Inflation Distortions: A new base year applies updated price weights to separate real growth from inflation effects. Using outdated prices (e.g., 2011-12) can overweight sectors like IT that were cheaper then. 
  • It also ensures GDP growth rates remain comparable over time by anchoring estimates to a recent “normal” year. 
• Policy & Investment Decisions: Accurate GDP data guides fiscal policies on taxation and spending, while businesses depend on GDP trends for expansion plans. 
  • It also strengthens global credibility, as bodies like the International Monetary Fund (IMF), World Bank, and rating agencies assess India’s economy using this data. 
• Corrects Past Anomalies: The 2015 revision drew criticism for overestimating growth due to methodological changes like greater reliance on corporate data, while delays since 2011-12 (skipping 2017-18 due to demonetisation/GST disruptions) make this update essential. 
  • The new 2022-23 base year will reflect Covid-19 impacts (e.g., healthcare’s rising GDP share) and policy changes like GST formalisation and Production Linked Initiative (PLI) schemes. 

What are the Key Challenges in GDP Base Year Revision? 

• Methodological Concerns: 
  • Over Reliance on Corporate Data: The 2015 GDP revision shifted to using the MCA-21 database for Private Corporate Sector (PCS) GDP, mostly discarding the IIP and ASI.  
    • This led to under coverage as many registered companies (especially in services) don’t file audited balance sheets, and created a large firm bias by overstating big firms’ profits while missing smaller enterprises. 
    • It overlooked actual value-added by small producers, despite 93% of India’s workforce being in the informal sector (Economic Survey 2018-19), where data is patchy (e.g., street vendors, small workshops). 
  • Single vs. Double Deflation Debate: India uses a single deflator (adjusting nominal GDP via CPI/WPI) rather than double deflation (adjusting output and input prices separately), which may distort real GDP growth, especially in manufacturing where input costs like oil and metals vary sharply. 
• Data Discrepancies Issues: While GDP growth appears robust, private consumption remains sluggish due to possible underreporting and incorrect inflation adjustments in GDP deflators. 
• Back Series & Historical Comparisons: Revising past GDP data to align with the new base year is technically complex, as seen with the 2018 back series that faced criticism for understating growth under the previous governments.  
  • New revisions risk disrupting long-term trend analysis and fueling political debates. 
• Credibility & Global Perception: The 2015 revision faced criticism from experts, who argued that methodological changes inflated growth rates.  
  • Improper weighting of the digital economy or corporate profits could harm India’s GDP credibility, deterring FDI and triggering market turmoil. 

How to Make India's GDP Base Year Revision More Reliable? 

• Adopt a Hybrid Data Approach: Balance corporate and survey data by combining MCA-21 with ASI, IIP, NSSO surveys.  
  • Strengthen data sources through annual enterprise surveys for MSMEs/unorganized sectors and big data analytics from digital platforms like e-commerce and the gig economy. 
• Coverage of Informal Sector: Expand survey coverage by increasing sample size and frequency of PLFS and CES and using Aadhaar-linked data to track informal employment and income.  
  • Integrate alternative data like UPI transactions, GST compliance rates, and EPFO records to better estimate informal GDP contributions.  
• Shift to Double Deflation: Adopt double deflation to adjust output and input prices separately, especially for manufacturing and agriculture sectors.  
  • Ensure GDP estimation aligns with UN System of National Accounts (SNA 2008) standards. 
• Enhance Transparency: Publish a technical white paper detailing sectoral weight changes, deflator choices, back-series methodology, and addressing past criticisms like the 2015 corporate data bias.  
  • Ensure independent peer review by involving the IMF, World Bank, and academic experts to validate the revisions. 
• Institutionalize Regular Revisions: Avoid delays in base year revisions (like 2017-18 revision).  
  • Invest in AI-driven GDP tracking using high-frequency indicators like electricity demand and freight movement for timely and accurate estimates. 
• Address Sectoral Gaps: Properly weight digital services (UPI, OTT platforms), renewables, and startups, while recalibrating outdated industries like traditional textiles and print media for accurate GDP estimation. 

Conclusion 

India's GDP base year revision to 2022-23 aims to reflect economic transformations post-pandemic and policy reforms. By addressing data gaps, adopting hybrid methodologies, and ensuring transparency, it can enhance reliability. However, challenges like informal sector measurement and corporate data bias must be resolved to maintain credibility and support India's growth aspirations.