Why in News?
- The Ministry of Statistics and Programme Implementation (MoSPI) is releasing a new series of national accounts, revising the base year from 2011–12 to 2022–23.
- The revision incorporates methodological upgrades and new data sources, including expanded use of GST data, ASUSE, and financial sector datasets.
- Objective: Improve accuracy of GDP and Gross Value Added (GVA) estimates, reduce extrapolation bias, and better capture structural shifts in the economy.
Relevance
GS Paper III – Economy
- GDP vs GVA concepts.
- Base year revision (2011–12 → 2022–23).
- GST integration in national accounts.
- Impact on fiscal deficit and debt ratios.
GS Paper II – Governance
- Role of MoSPI & NSO.
- Statistical credibility and transparency.
Mains Practice Question (15 Marks)
- Base year revisions are essential for accurate national income estimation but often generate controversy. Discuss the significance and challenges of India’s shift to the 2022–23 GDP base year.
National Income Accounting in India
Constitutional and Institutional Framework
- National income statistics compiled under Collection of Statistics Act, 2008.
- MoSPI through the National Statistical Office (NSO) prepares GDP, GVA, and related macroeconomic aggregates.
- Base year revision undertaken periodically to reflect structural transformation; previous base year: 2011–12 (revised in 2015).
GDP and GVA Concepts
- GDP (Gross Domestic Product): Market value of final goods and services produced within domestic territory.
- GVA (Gross Value Added): Output minus intermediate consumption; sectoral performance measured primarily through GVA.
- GDP at market prices = GVA + product taxes – subsidies.
Why Base Year Revision Matters ?
- Ensures updated price structure, production patterns, consumption weights.
- Improves sectoral comparability and inter-temporal analysis.
- Aligns with UN System of National Accounts (SNA 2008) standards.
Key Methodological Changes in New Series
1. Base Year Shift: 2011–12 → 2022–23
- Reflects post-pandemic structural changes, digitalisation, formalisation trends, and GST-led tax transparency.
- Reduces distortions caused by outdated price weights and sector composition.
2. Enhanced Use of GST Data
- GST data now used to better estimate value added of private corporations, replacing partial extrapolations.
- Helps capture activity-wise revenue shares, reducing sectoral misallocation in GVA estimation.
- Enables improved regional output measurement through transaction-level tax data.
3. Improved Corporate Sector Estimation
- Greater reliance on Annual Survey of Unincorporated Sector Enterprises (ASUSE) and administrative datasets.
- Replacement of proxy-based estimates for Non-Banking Financial Companies (NBFCs) with actual financial filings.
- Improves capture of private final consumption expenditure and service-sector output.
4. Household Sector Improvements
- Household sector output earlier estimated through extrapolation; new series uses enhanced Household Consumer Expenditure Surveys.
- Direct estimation reduces imputation bias in informal and self-employment sectors.
5. Financial Sector Refinement
- Utilisation of Statistical Tables Relating to Banks in India (STRBI) from RBI.
- Incorporates both public and private bank data comprehensively.
- Better measurement of financial intermediation services indirectly measured (FISIM).
Economic Significance
1. Formalisation Capture
- GST integration reflects impact of post-2017 tax reform on formalisation and compliance expansion.
- Enhances measurement of digital transactions and enterprise-level reporting.
2. Policy Precision
- More accurate GVA data improves fiscal deficit calculations, debt-to-GDP ratios, and sectoral productivity analysis.
- Affects FRBM compliance metrics and international investor perception.
3. Sectoral Rebalancing
- Improved housing services measurement includes value of government-provided housing benefits.
- Strengthens public sector output accounting.
Challenges
- Comparability Break: Base year revision complicates inter-temporal comparisons with 2011–12 series.
- Data Quality Dependence: Heavy reliance on GST assumes high compliance; informal sector leakages may persist.
- Extrapolation Risks Reduced but Not Eliminated: Household sector and small enterprises still partly estimated indirectly.
- Revision Volatility: Frequent back-series adjustments may create policy uncertainty and credibility debates.
- State-Level Disparities: Regional GST reporting variations may distort sub-national GDP estimates.
Way Forward
- Transparent Back-Series Publication: Release consistent recalculated historical GDP to preserve analytical continuity.
- Strengthen Informal Sector Surveys: Expand ASUSE frequency and coverage to capture gig and platform economy growth.
- Integrate Digital Payment Data: Use UPI and digital transaction datasets for improved services-sector estimation.
- Independent Statistical Audit Mechanism: Enhance credibility through peer review by National Statistical Commission.
- Capacity Building at State Level: Harmonise data reporting standards to improve regional GSDP accuracy.
Prelims Pointers
- Base year revised to 2022–23 from 2011–12.
- GDP = GVA + taxes – subsidies.
- ASUSE replaces earlier proxy-based unincorporated sector estimation.
- GST data now integrated into corporate GVA estimation.
