BS EDIT: Revamping India’s GDP Metrics

By Business StandardPublished On Dec 5, 2024

Why update GDP base year?

The GDP base year is set to shift from 2011-12 to 2022-23, aiming to improve accuracy and align with current economic realities

Key challenges

GDP data faces challenges: deflator over-reliance, inconsistent private-sector data, and misclassified or untraceable companies affecting reliability

Potential role of GST data

GST data aids economic accuracy, but measuring the informal sector's size and evolving impact poses significant challenges

The informal sector dilemma

India's informal economy is vast; innovative GDP estimation is needed. GST adoption shifts the informal-formal balance, complicating measurement

Lessons from the past

A robust back series and producer-price index are key to credible GDP updates, addressing past gaps and enhancing transparency in future assessments

Broader implications

Better GDP data aids policymaking, boosts investment, ensures credibility, and aligns with India’s rising global economic role