A Multi-Pronged Approach
The Indian government is undertaking a significant effort to update the base year for national accounts, aiming to provide a more comprehensive picture of the country's economic activity. This initiative involves tapping into a wider range of data sources, including information on Goods and Services Tax (GST) collection, construction activities, and the micro, small, and medium enterprises (MSME) sector.
The focus on these areas stems from the limited data available for the unorganized and services sectors, which are crucial components of the Indian economy. By incorporating data from the Annual Survey of Unincorporated Sector Enterprises, the government hopes to gain a better understanding of these sectors and their contribution to the national economy.
Discussions are ongoing regarding the selection of the new base year, with 2022-23 emerging as a potential candidate. This year is seen as advantageous due to the receding impact of the COVID-19 pandemic and the normalcy experienced in monsoon patterns. However, 2023-24 remains an alternative option, offering the benefit of further economic recovery.
In parallel, the Ministry of Statistics and Programme Implementation (MOSPI) is also updating the base year for the Consumer Price Index (CPI) and the Index of Industrial Production (IIP), ensuring consistency across these key economic indicators. The results of the Household Consumption Expenditure Survey 2023-24 will play a crucial role in this process, providing valuable data for CPI updation.
Currently, the base year for national accounts (GDP) stands at 2011-12, while the CPI base year is 2012. The completion of these update exercises will provide a more accurate and up-to-date representation of India's economic performance, enabling better informed policy decisions and economic planning.