India received a Grade C—for the second consecutive year—on the quality of its national accounts and government finance data. Grade C indicates that the data shared with the International Monetary Fund (IMF) “have some shortcomings that somewhat hamper surveillance”. In effect, persistent weaknesses in key statistical areas make it difficult for the IMF, economists, investors and policymakers to obtain a fully accurate and timely picture of the Indian economy.
The IMF’s assessment broadly echoes concerns long flagged by economists and analysts in India.
The primary issues relate to national accounts data — especially GDP and gross national income — stemming from an outdated base year and shortcomings in the deflation methodology. India continues to use 2011–12 as the base year for calculating real GDP. Experts argue that for a rapidly evolving economy like India’s, a decade-old base year fails to reflect structural shifts. The IMF and others have noted that relying on outdated relative prices and sectoral weights can misstate growth, particularly by under-capturing emerging sectors such as digital services.
Responding to these concerns, Chief Economic Adviser V Anantha Nageswaran told this newspaper recently that the issues flagged by the IMF — including base-year revision and the use of a single deflator — are well recognised and are being actively addressed by the Ministry of Statistics and Programme Implementation (MoSPI), with improvements planned by 2026. He added that these methodological limitations could just as easily understate GDP as overstate it.
Acknowledging these gaps, the government’s statistical arm — the National Statistical Office (NSO) — has for the past few years been working not only to revise the base year for GDP and the Consumer Price Index (CPI), but also to expand and deepen data sources to better capture the economy’s evolving structure.
Rebasing GDP
From next year, the government will shift the GDP base year to 2022–23 from the current 2011–12. This will mark India’s first GDP rebasing exercise in over a decade — the previous revision was carried out in January 2015, when the base year was changed from 2004–05 to 2011–12.
The revision has been recommended by the Advisory Committee on National Account Statistics (ACNAS). The new GDP series is intended to capture structural changes in the economy, incorporate improved and newer data sources, and align estimates with updated methodological standards. The first GDP estimates under the new series are scheduled to be released on February 27, 2026.
“2022–23 is a natural choice for the GDP base year, as the Annual Survey of Industries (ASI), the Annual Survey of Unincorporated Sector Enterprises (ASUSE) and the Household Consumption Survey were conducted during that year,” former Secretary, Statistics and Programme Implementation, Dr Sourabh Garg had told this newspaper earlier.
Former Chief Statistician Pronab Sen had also pointed out that a base year should ideally be a “normal” year without major economic shocks, adding that either 2022–23 or 2023–24 would meet that criterion. While 2022–23 will be used as the base year for GDP, the government plans to use 2023–24 as the base year for the Consumer Price Index.
Why need for base year change
Over time, economies undergo significant changes — consumption patterns evolve, sectoral contributions shift and product baskets expand. Updating the base year ensures that these changes are accurately reflected in official statistics. Persisting with an outdated base year risks under- or over-estimating certain sectors, potentially misleading policymakers.
In practical terms, rebasing means that real GDP will be calculated by valuing current output using prices from the new base year (2022-23), thereby stripping out the impact of inflation. For instance, if an economy produces 100 units of goods and services priced at `10 each in the base year, and the same output is priced at `12 the following year, nominal GDP would rise by 20%. However, once price changes are adjusted for, real GDP growth would be zero.
Impact of a base-year change
A base-year revision also involves recalculating GDP estimates for earlier years, which can result in upward or downward revisions to past growth rates. For example, when India rebased GDP to 2011–12, growth for 2013–14 was revised upward from 4.7% to 6.9%.
Such revisions reflect changes in sectoral weights and consumption patterns. Recent Household Consumption Expenditure Surveys for 2022–23 and 2023–24 show a declining share of food expenditure and a rising share of spending on digital services—trends that older base years fail to capture adequately.
The new base year will also be accompanied by updated statistical tools, improved methodologies and a broader range of data sources, enhancing overall data quality.
For example, the new series will make greater use of data from the Household Consumption Expenditure Survey, alongside inputs from the ASI, ASUSE, Periodic Labour Force Survey (PLFS), the Reserve Bank of India, e-Vahan, Central Electricity Authority, petroleum and natural gas data, food and public distribution databases, the Exim Data Bank, the Ministry of Commerce and Industry, the Directorate General of Civil Aviation, Railways and population projections from the Ministry of Health and Family Welfare, among others, to compile private final consumption expenditure estimates – an important component of the GDP.
Experts have pointed out that for national accounts and other macroeconomic data to be more credible, the government should undertake the exercise of changing the base year more frequently – preferably every five years instead of the current practice of revising it every 10 years. Hopefully, once the new base years are applied from February 2026, at least some of the issues raised by the IMF would be addressed.