India’s Ministry of Statistics and Programme Implementation (MoSPI) has released a new series of national accounts estimates, shifting the base year from 2011-12 to 2022-23. This new GDP announcement makes India a roughly Rs 345.5 trillion rupee economy in nominal terms for the fiscal year 2025-26. In dollar terms, it is approximately $3.8 trillion economy. Is India on track to become a $5 trillion economy by 2027-28?
This important update modernises India’s GDP measurement to better reflect the post-pandemic economic landscape, incorporating fresh data sources, refined methodologies, and broader coverage for enhanced accuracy and global comparability.
“Real GDP or GDP at Constant Prices is estimated to attain a level of Rs 322.58 lakh crore in the FY 2025-26, against the First Revised Estimate (FRE) of GDP for the year 2024-25 of Rs 299.89 lakh crore. The growth rate in real GDP during 2025-26 is estimated at 7.6 per cent as compared to 7.1 per cent in 2024-25. Nominal GDP or GDP at Current Prices is estimated to attain a level of Rs 345.47 lakh crore in the year 2025-26, against Rs 318.07 lakh crore in 2024-25, showing a growth rate of 8.6 per cent,” according to the report released by MoSPI.
The System of National Accounts (SNA): GDP global alignment
The System of National Accounts (SNA) remains the cornerstone of international macroeconomic statistics, providing a consistent framework for measuring economic activity worldwide. Developed collaboratively by the United Nations, the International Monetary Fund (IMF), the World Bank, the OECD, and Eurostat, the SNA ensures that countries can produce comparable GDP data. The latest iteration, the 2025 SNA, was adopted by the United Nations Statistical Commission in March 2025. It preserves the core structure of the 2008 SNA while introducing updates to address contemporary challenges, including globalisation, digitalisation, financial innovations (such as Islamic finance), the informal economy, and greater emphasis on wellbeing and sustainability. These include improved treatments for unpaid household services, human capital, and environmental considerations.
India’s national accounts have long aligned with the 2008 SNA, the standard in place during previous revisions. The new 2022-23 base series builds on this alignment, integrating methodological improvements that enhance consistency with SNA principles. This positions India favourably for eventual adoption of the 2025 SNA, with global implementation expected around 2029-2030.
MoSPI has formed a dedicated sub-committee to prepare for the 2025 SNA updates, demonstrating forward-looking commitment to international best practices.
The IMF 'C' rating for Indian GDP series
This revision directly addresses feedback from the IMF’s 2025 Data Adequacy for Surveillance assessment, which assigned India’s national accounts a “C” rating. The assessment highlighted limitations such as an outdated base year, reliance on single deflation, coverage gaps in the informal sector, and discrepancies between production and expenditure sides. These issues somewhat hampered effective economic surveillance.
The new series responds constructively by updating benchmarks, introducing double deflation in select sectors, drawing on administrative data for better timeliness, and strengthening informal sector estimates through regular surveys.
Strategic choice of 2022-23 to rebase GDP series
Rebasing to 2022-23 represents a recent “normal” post-COVID period, featuring robust sectoral data that captures structural shifts, including the full effects of the Goods and Services Tax (GST), digital economy expansion, gig economy growth, and ongoing formalisation. This follows SNA guidance on periodic rebasing to ensure benchmarks reflect current realities, avoiding distortions from an aging 2011-12 reference period.
Methodological advancements
A key methodological advancement is the calibrated shift toward double deflation in agriculture and manufacturing. This approach deflates output and intermediate consumption separately using sector-specific price indices, producing more precise constant-price value added. It mitigates biases inherent in the previous single deflation methods, which sometimes blended CPI and WPI inconsistently. For services, where double deflation remains challenging, single deflators or volume extrapolation continue, but overall coverage improves significantly. Deflators now draw from 500–600 items, leveraging updated series like the new CPI (base 2024), Unit Value Indices (UVI base 2022-23), and WPI/PPI where applicable—up from roughly 180 items previously.
Increased use of administrative database
The revision expands reliance on timely administrative data sources, aligning with the SNA’s emphasis on integrated, comprehensive inputs. These include granular GST data (by business and SAC codes), MCA21 corporate filings, PFMS for government expenditure, e-Vahan vehicle registrations, RBI and NABARD indicators, port/air/rail traffic metrics, and banking statistics. Such near real-time flows enhance granularity, reduce lags, and bolster robustness.
Informal economy data is still a challenge?
Earlier analyses to capture informality in the economy including those using satellite data like night-time lights underscored coverage gaps in past series; the updated direct methods used in the new GDP series offer superior insights.
Coverage of the informal and gig economy sees substantial gains in new GDP series. The regular annual surveys, such as the Annual Survey of Unincorporated Sector Enterprises (ASUSE) and Periodic Labour Force Survey (PLFS), provide dynamic benchmarks. Gig activities benefit from integration of company reports, household income data, and GST records, moving away from outdated proxies. This aligns closely with the 2025 SNA’s refined guidance on capturing the informal economy more effectively.
Additional enhancements include tighter integration of Supply-Use Tables to minimise discrepancies between production and expenditure approaches, Proportional Denton benchmarking for consistent quarterly series, and seasonally adjusted estimates to support cyclical analysis —consistent with SNA recommendations for quarterly accounts
These changes, developed over two years through expert committees and sub-committees (including those on new data sources, methodological improvements, constant price estimates, regional accounts, and SNA 2025 updates), strengthen India’s framework considerably.
High frequency GDP series
While high-frequency indicators like the Index of Industrial Production (IIP) still serve as proxy for GDP by the economists in high frequency data models. Hope the new series will also follow a new set of high frequency data series of GDP, and to construct the “potential GDP”.
These methodological advancements as meaningful steps toward greater credibility, transparency, and international comparability. As India pursues inclusive, sustainable growth amid global uncertainties, this refined national accounts framework provides a stronger foundation for evidence-based policymaking, fiscal planning, and deeper global economic integration. Continued progress towards full implementation of the 2025 SNA will further elevate the quality of India’s macroeconomic statistics.
Good data is an international public good
This revision is more than a technical update, it reflects India’s attempt to robust, reliable data in service of better economic governance and prosperity for its people. Good data is an international public good.
Comparable GDP backlog series (with the new GDP base for previous years) of national and state data is awaited in the public domain, and till then its a “macroeconomic standstill” if economists cannot do a meaningful time series analysis as GDP data with new base is not comparable to earlier data.
Macroeconomists, otherwise go ad hoc “GDP splicing” to keep the new and old GDP series now comparable!
The fiscal exercises including the tax buoyancy estimations (tax buoyancy is the responsiveness of tax to increase in GDP) and the fiscal consolidation exercises (as deficit and debt thresholds normalised to GDP) will be recaliberated and estimated to new GDP series. The Central bank’s MPC decisions on economic outlook fan charts will be tuned to new GDP series. The GDP projection used by the Union Budget 2025-26 is given in the budget documents and this deviation in the GDP series can affect the size of the economy ( measured as expenditure to GDP ratio) and other threshold ratios of RE and actual debt and deficits in the budget. Gross Fixed Capital Formation (GFCF) have exhibited more than 7 per cent growth rate in FY 2025-26, and explains government’s commited public infrastructure drive to sustain GDP numbers.
The author is a Professor at the National Institute of Public Finance and Policy (NIPFP), New Delhi, and an elected Member of the Governing Board of Management at the International Institute of Public Finance (IIPF) Munich.
The opinions expressed in this article are those of the author and do not purport to reflect the opinions or views of THE WEEK.
