Recasting India’s Growth Numbers: Understanding the New GDP Series with 2022–23 as Base Year

Why in News ?

The Government has released a new GDP series with 2022–23 as the base year, revising India’s FY26 growth to 7.6% and Q3 (Oct–Dec 2025) growth to 7.8%. The revised series replaces the earlier 2011–12 base year estimates.

Introduction of the New GDP Series

The Ministry of Statistics and Programme Implementation (MoSPI) has introduced the updated National Accounts Statistics (NAS) series with 2022–23 as the base year, replacing the 2011–12 base year.

Why Revise the Base Year ?

Base year revisions are periodically undertaken to:

• Reflect structural changes in the economy
• Incorporate new data sources
• Improve estimation techniques
• Align with global statistical standards

The last major revision occurred in 2015 when the base shifted to 2011–12.

Under the new series:  

• Q3 FY26 growth: 7.8%
• Full-year FY26 growth (Second Advance Estimate): 7.6%
• Earlier estimate under old series: 7.4%

Revisions in Growth Rates

The updated methodology has led to revisions in past GDP figures:

Quarterly Estimates (FY26)

• Q1: 6.7%
• Q2: 8.4%
• Q3: 7.8%

MoSPI has announced that a complete historical back series recalculation will be released by December 2026.

Major Methodological Improvements

1. Shift to Double Deflation

The most significant reform is the move from single-deflator to double-deflation methodology for estimating real Gross Value Added (GVA).

Earlier System – Single Deflator:

• Used one inflation index to deflate both inputs and outputs.
• Risk of distortion when input and output prices diverged.

New System – Double Deflation:

• Separately adjusts input and output prices.
• Produces more accurate real value-added estimates.
• Aligns with international best practices under the UN System of National Accounts.

2. Integration of New Data Sources

The revised series incorporates:

• GST data
• e-Vahan vehicle registration data
• Annual Survey of Unincorporated Sector Enterprises (ASUSE)
• Periodic Labour Force Survey (PLFS)

Additionally, Supply and Use Tables (SUT) have been integrated into national accounts to reduce discrepancies between production-based and expenditure-based GDP estimates.

Sectoral Growth Trends in FY26

Secondary Sector (Strong Momentum)

• Overall Growth: 9.5%
• Manufacturing: 12.5%
• Construction: 6.9%

Manufacturing-led expansion suggests improved industrial performance.   

Primary Sector (Moderation)

• Overall Growth: 2.8%
• Agriculture: 2.5%
• Mining & Quarrying: 5%

The slowdown reflects agricultural moderation compared to the previous year.

Tertiary Sector (Resilient Services Growth)

• Overall Services Growth: 8.9%
• Trade, Hotels, Transport: 10.3%
• Financial, Real Estate, IT & Professional Services: 10%

Services remain a key growth driver. 

Downward Revision in Nominal GDP

While real growth has improved, the nominal GDP size has been revised downward.   

• FY26 Nominal GDP: ₹345.47 lakh crore
• Approximately 3.3% lower than old series estimates
• FY24 & FY25 also revised down by about 3.8%

Nominal GDP is critical for fiscal calculations since it reflects the economy’s current-price value.

Impact on Fiscal Ratios

Because fiscal ratios are expressed as a percentage of nominal GDP:

• Fiscal Deficit  FY26: 4.51% (earlier 4.36%)
• Debt-to-GDP FY27: 57.5% (earlier target 55.6%)

Although absolute borrowing remains unchanged, a smaller GDP base increases these ratios, making fiscal consolidation targets steeper.

Broader Significance

1. Statistical Modernisation

Represents one of the most important reforms in India’s national accounting system in over a decade.

2. Better Sectoral Measurement     

Improves representation of manufacturing, services, and informal sectors.

3. Policy Recalibration

Revised numbers influence fiscal planning, monetary policy, and debt management strategies.

4. International Credibility

Alignment with global statistical standards enhances investor confidence. 

5. Transparent Economic Benchmarking

Provides a more realistic measure of growth trends.

Challenges Ahead

• Complexity of double deflation implementation
• Back-series reconstruction
• Data quality from states
• Informal sector measurement gaps
• Managing perception amid revisions

Transparent communication and timely release of historical data will be critical.