India Revamps GDP Series, Invites Industry Feedback for Revisions

The Government of India is set to overhaul its gross domestic product (GDP) series, introducing significant changes aimed at improving accuracy and relevance. This transformation involves the inclusion of previously omitted factors such as the value of government-provided housing, the incorporation of Limited Liability Partnerships (LLPs), and revised deflators for key sectors including mining, financial services, and real estate.

The Ministry of Statistics and Programme Implementation (MoSPI) unveiled a discussion paper outlining these revisions, which are designed to enhance the estimation methodologies used in calculating GDP. One of the major changes involves how the non-financial private corporate sector’s output is reported. Instead of attributing the entire output of multi-activity firms to a single major line of business, the new methodology will utilize activity-wise turnover reporting in company filings to distribute output and gross value added (GVA) across various segments.

Key Changes in GDP Calculation

To more accurately assess the unincorporated sector, the revised series will compute GVA directly each year, employing productivity data from the Annual Survey of Unincorporated Sector Enterprises (ASUSE) alongside workforce estimates from the Periodic Labour Force Survey (PLFS). This new approach replaces the outdated method that depended on extrapolated data from surveys conducted over a decade ago.

The updated GDP series will have a base year of 2022-23 and is scheduled for release on February 27, 2026. This series will replace the current 2011-12 base, leveraging more granular data and taking advantage of available administrative datasets and annual enterprise surveys. In addition, there will be revisions within the financial sector. For deposit-taking institutions, the Statistical Tables Relating to Banks in India will be utilized, while data from the Ministry of Corporate Affairs (MCA) will inform estimates for private non-banking financial companies (NBFCs).

The new methodology will also enhance estimates for moneylenders and insurance agents, drawing from the ASUSE and the All India Debt & Investment Survey (AIDIS) 2019. Furthermore, the treatment of pensions within the general government sector will see a notable shift. Pension liabilities will now be imputed to reflect the transition from the Old Pension Scheme to the National Pension System, moving away from treating annual pension outgo as a current-period entitlement.

Invitation for Industry Feedback

MoSPI is actively expanding the coverage of autonomous and local bodies while implementing other updates, such as revised input-output ratios for marine and inland fisheries and new rates for estimating fodder output. The agency is also updating repair and maintenance costs for dwellings based on data from AIDIS 2019.

This announcement represents the first of two planned discussion papers, with the current focus on changes to the production and income approach. A subsequent paper will outline revisions on the expenditure side. MoSPI has invited feedback from experts, government bodies, and financial institutions regarding the proposed methodology, with a deadline set for December 10.

This comprehensive revamp aims to provide a more accurate reflection of India’s economic landscape, catering to the evolving needs of policymakers, analysts, and the business community.