GDP Base Year Update: Need for Transparency

Background: India’s GDP Base Year Revision

• The Government announced revising the GDP base year from 2011–12 to 2022–23, with MoSPI aiming for release by February 2026 .
• A 26-member Advisory Committee on National Accounts Statistics (ACNAS), chaired by Biswanath Goldar—including RBI, central/state officials, academia—was formed to guide methodology and incorporate new data sources .

Why Transparency is Critical

• Restoring Credibility: The 2015 revision faced criticism for over-reliance on corporate MCA-21 data, potentially overstating growth and eroding trust .
• Global Standards Alignment: Frequent (every 5–10 years) base year updates align with UN/IMF recommendations, ensuring data comparability and reducing inflation biases .
• Enhanced Policymaking: A reliable base year reflects actual economic structure—services, digital platforms, informal sector—vital for informed decisions .

Expert Recommendations for a Robust Process

Based on recent expert insights:

1. Methodological Clarity
   • Publish a technical white paper detailing:
     • Sector weight computation,
     • Deflator usage (preferably double deflation),
     • Back series methodology
   • Address past corporate bias and data gaps transparently .
2. Independent Third‑Party Reviews
   • Engage IMF, World Bank, academic peers for impartial assessments.
   • Encourage academic and civil society oversight .
3. Regular Scheduled Updates
   • Institutionalize base-year revisions every 5 years per National Statistical Commission norms—not skip cycles (like 2017–18) .
4. Hybrid Data Sources
   • Combine corporate (MCA‑21) and survey-based data (e.g., ASI, PLFS, CES).
   • Integrate administrative digital indicators (UPI, GST, EPFO) to capture informal economy growth .
5. Institutional Accountability
   • Empower NSC or MoSPI to own transparent communication.
   • Create a dedicated portal with:
     • Methodology,
     • Data releases,
     • Peer reviews to reinforce public trust .

Implications for Policy and Credibility

• Economic Decision‑making: A transparent, accurate GDP base aids in setting budgets, evaluating sectoral growth, and calibrating fiscal/monetary strategy.
• Investor Confidence: Reliable macro-data is key to attracting global investment and improving India’s economic ratings.
• International Comparability: Aligning with global norms supports India’s positioning in G20, IMF, and multilateral dialogues.

UPSC Relevance

Suggested UPSC Mains Question

Q: “Revising the GDP base year enhances policy formulation and global credibility. Critically analyze the issues in India’s base year revisions so far and suggest measures to strengthen the process.”

• Approach: Define GDP base-year; assess need and impact; examine past challenges (2015 MCA bias, skipped cycles, data gaps); propose measures (methodology, reviews, regularity); conclude on policy and investment significance.