New Series of National Accounts Data in India
The release of the new series of national accounts data marks a significant improvement in India's economic statistics.
Key Updates and Methodological Improvements
- Base Year Update: The base year for India's GDP and Gross Value Added (GVA) data has been updated to 2022-23 from 2011-12. This update was necessary as the older base year was becoming outdated.
- Double-Deflator Approach: This approach separately accounts for inflation in intermediate goods and the final product, enhancing the accuracy of real value added in production.
- Sectoral Data Accuracy: Multi-sector company outputs are now allocated proportionately, improving sectoral data accuracy.
- Household Data Sources: Data will now be sourced from the Annual Survey of Unincorporated Sector Enterprises (ASUSE) and the Periodic Labour Force Survey (PLFS) annually rather than relying on extrapolations.
- Inclusion of GST Data: The new series utilizes Goods and Services Tax data, providing valuable consumer insights.
- Challenges in Estimation: New methods and sources have been introduced for sectors like agriculture and the informal sector, traditionally difficult to quantify.
Economic Growth Predictions
- Growth Rate: India's GDP is expected to grow 7.6% in the financial year 2025-26, compared to a 7.4% prediction under the old series.
- Economic Size: The new series estimates India's economy at ₹345.47 lakh crore in 2025-26, approximately 3.3% smaller than previous predictions.
- Revised Projections: The economic size for 2023-24 and 2024-25 was adjusted downward by 3.8% each.
- Implications: With currency depreciation, India is currently a $3.8 trillion economy, making the $5 trillion target more challenging.
Policy Implications
The smaller economic size complicates efforts to reduce the fiscal deficit and debt, as these ratios are linked to nominal GDP. However, aligning targets with accurate data is preferable to relying on outdated metrics.
