Context

• The release of a new Gross Domestic Product (GDP) series with the base year updated to 2022–23 marks a significant milestone in India’s national accounting system.
• Announced on February 27, 2026, by the Ministry of Statistics and Programme Implementation, this revision responds to a long-standing need for more accurate and contemporary economic measurement.
• By replacing the outdated 2011–12 base year, the new series aims to present a more realistic picture of the Indian economy while incorporating methodological improvements aligned with global standards.

Overview of the New GDP Estimates

• According to the revised series, India’s GDP at current prices is estimated at ₹261.18 lakh crore for 2022–23, ₹289.84 lakh crore for 2023–24, and ₹318.07 lakh crore for 2024–25.
• These figures are slightly lower, by approximately 3-4%, than earlier estimates based on the previous series, indicating a recalibration rather than a drastic revision of economic size.
• Sectoral composition remains broadly stable, with the tertiary (services) sector dominating at 52.9%, followed by the secondary (industrial) sector at 25.8%, and the primary (agriculture) sector at 21.4% in 2024–25.
• Notably, the manufacturing sector demonstrates strong growth, recording real Gross Value Added (GVA) increases of 12.7% in 2023–24 and 9.3% in 2024–25.
• On the demand side, private final consumption expenditure continues to be the primary driver, contributing around 56% of GDP.

Key Methodological Improvements

• Introduction of Several Methodological Refinements
  • First, the segregation of multi-activity enterprises allows for a more precise allocation of GVA across different business activities.
    • Previously, entire GVA was attributed to a firm’s principal activity, which often distorted sectoral contributions.
  • Second, the adoption of differentiated scaling factors based on firm size improves the estimation of contributions from non-reporting companies.
  • Third, the expanded inclusion of Limited Liability Partnerships (LLPs) ensures broader coverage of economic activity within the corporate sector.
• Upgradation of the Estimation of the Household Sector’s GVA
  • Instead of relying on extrapolations from a fixed base year, the new series uses annual data on GVA per worker from the Annual Survey of Unincorporated Sector Enterprises (ASUSE), combined with employment estimates from the Periodic Labour Force Survey (PLFS).
  • This shift allows for more dynamic and responsive measurement of informal sector contributions.
• Wider Use of Double Deflation
  • Further improvements include the wider use of double deflation and volume extrapolation methods to estimate real GVA, aligning India’s practices with international statistical standards.
  • The incorporation of data from the Household Consumption Expenditure Survey (HCES 2022–23) also strengthens the estimation of private consumption, particularly for essential goods with stable demand patterns.

Persistent Structural Challenges

• Despite these advancements, several challenges remain.
• One major issue lies in allocating national-level GVA of private corporations across states to derive Gross State Value Added (GSVA).
• Since company-level data from the Ministry of Corporate Affairs is not geographically disaggregated, state-level estimates rely on proxies such as the Annual Survey of Industries (ASI) and Goods and Services Tax (GST) data.
• However, the ASI suffers from a limited sampling frame, covering only a fraction of manufacturing entities.
• This discrepancy can lead to inaccurate state-level allocations, thereby affecting the reliability of regional GDP figures.
• Expanding the ASI frame using MCA and GST databases, or conducting dedicated surveys of active firms, could help address this limitation.

Volatility in Household Sector Estimates

• Another area of concern is the volatility observed in estimates of GVA per worker derived from ASUSE.
• Significant year-to-year fluctuations in certain industries and states raise questions about data reliability.
• Although the use of a three-year moving average has been suggested as a corrective measure, it may not fully resolve underlying inconsistencies.
• A more robust solution could involve redesigning the ASUSE using a rotating panel approach, similar to the PLFS.
• Such a design would ensure continuity in sampling and improve the stability of estimates over time.

Conclusion

• The introduction of the 2022–23 GDP base year represents a substantial step forward in improving the accuracy and credibility of India’s national accounts.
• Enhanced methodologies, better data integration, and alignment with global standards make the new series a more reliable indicator of economic performance.
• However, challenges related to state-level allocation and data volatility, particularly in the household sector, highlight the need for continued refinement.
• Ultimately, strengthening survey frameworks like the ASI and ASUSE, along with leveraging administrative data sources more effectively, will be crucial in further enhancing the quality of GDP and GSDP estimates.
• The new series, while a significant improvement, should thus be viewed as part of an ongoing process of statistical evolution.