Rebased GDP series sharpens view of India’s economy

GDP is a way to measure the size and health of a country's economy. It needs regular calibration to capture the economy's accurate pulse, which is achieved through updating the base year of GDP at regular intervals. As the economy reshapes itself, new industries emerge, consumption patterns change and new data sources evolve, revisions help official data catch up with realities and make estimates more accurate and robust.

Availability of new data sources since the last base revision has helped us view sectoral and regional contributions to GDP clearly and adopt better methods. For instance, to estimate the value added by the unincorporated sector, broadly covering the informal sector as well.

Since the last base revision, some new data sets like management and administration related data (MGT-7/ 7A) for companies have become available that provide information on business activities undertaken by the enterprise, a description of business activity (as per National Industrial Classification 2008), and percentage turnover from each business activity (industry) for each year.


So, while rebasing, for multi-activity enterprises, value added is now allocated across activities based on newly available MGT-7 data rather than entirely to the major activity as was done earlier. This change allows us to capture sectoral contributions more accurately, providing a clearer view of how each business activity drives the economy.

Just as new company-level data helps us measure sectoral contributions more accurately, enhanced use of GST data in the new series allows for a finer, more precise view of regional contributions of GDP by, inter alia, improving regional allocation about the private corporate sector and through better compilation of expenditure-side estimates at the state level.

Availability of annual data from Annual Survey of Unincorporated Sector Enterprises (ASUSE) and Periodic Labour Force Survey (PLFS), which wasn't available earlier, has also allowed us to adopt a better methodology for estimating value added by the unincorporated sector annually, instead of inferring its contribution to GDP indirectly from other indicators, as was done before. This matters because this sector, comprising millions of household businesses, small shops and self-employed workers, forms a huge part of the economy and plays a vital role in jobs and livelihoods.

The base revision is more than just the use of new data sources. It is also about improvements in methodology.

Double deflation

Earlier, double deflation, a detailed method to adjust GDP for changing prices, was applied only to the agriculture sector. In the new 2022-23 series, double deflation has been expanded to the manufacturing sector, where sufficient data is available, and single extrapolation/volume extrapolation is used in all other sectors.

This approach makes the best use of the data at hand, keeping estimates as accurate and reliable as possible. Double deflation is data-intensive, as it requires detailed information on prices for both outputs and inputs. As more of this data becomes available over time, we will be able to expand its use to more sectors.

Closing the gap

Alignment of estimates of the economy based on what is produced (production side) and what people spend (expenditure side). The two often don't match perfectly, a common occurrence, especially in quarterly GDP. To address this issue, in the new series, the framework of 'supply & use tables' is being used to ensure that discrepancies are limited in the early estimates and finally eliminated when the full set of data becomes available at the time of final estimates.

Updated GDP is like looking at the economy through a sharper lens. Every economic activity, big or small, comes into clear focus, accurately revealing its contribution to the nation's growth. By using better data, refining methods and aligning with international best practices, GoI has brought the economy into sharper view.

For citizens, this means that policies and public services are guided by an accurate understanding of how the economy works, making growth something that is felt in everyday life, not just on paper.

The writer is secretary, ministry of statistics and programme implementation, GoI