From 27 February, India to Update GDP Base Year to 2022-23: Finance Minister Explains Benefits

New Delhi: Following recent GST reforms, the government is now set to update India’s major economic indicators, including GDP calculations. Finance Minister Nirmala Sitharaman informed Parliament that from 27 February, the base year for GDP computation will change to 2022-23, replacing the long-standing 2011-12 base year. This update aims to make national accounts more reflective of current economic realities.

Why the Change?
The current base year, 2011-12, has been in use for over a decade. Updating it will provide a more accurate representation of India’s economic activities, capturing recent structural and sectoral changes in the economy. The announcement follows an IMF report that assigned a “C” grade to India’s national accounts data. Minister Sitharaman clarified that this grading was due to the outdated base year and not the quality of data itself.

Impact on GDP and Economic Analysis
The revised GDP figures will be based on 2022-23 prices, providing policymakers, analysts, and researchers with a more realistic understanding of economic growth and sectoral contributions. The first set of updated GDP data will be released on 27 February. Meanwhile, the upcoming budget estimates on 7 January will still rely on figures based on the old base year.

Additional Benefits of the Update
Updating the base year will also address certain limitations in current statistics. For instance, public distribution system (PDS) subsidies are not fully reflected in expenditure accounts, as benefits are provided in-kind rather than cash. Furthermore, the Ministry of Statistics and Programme Implementation (MoSPI) is revising the Consumer Price Index (CPI) to better reflect actual consumption patterns. This includes updating item weights, revising the consumption basket, and improving calculation methodologies.