Revised base year, e-data in price index restructuring

The Ministry of Statistics and Programme Implementation (MoSPI) is in the process of revising the base years for computing Consumer Price Index (CPI), Index of Industrial Production (IIP) and Gross Domestic Product (GDP). It also proposes to include online sources as well as e-commerce platforms to compute retail inflation in a bid to substantially improve reliability, accuracy, and overall quality of the Consumer Price Index (CPI).

Early this month, the International Monetary Fund (IMF) gave India’s national accounts statistics a ‘C’ rating for the second year, citing shortcomings that hinder economic surveillance.

Key issues that the IMF highlighted were an outdated 2011-12 base year for GDP, reliance on the WPI instead of the more relevant Producer Price Index (PPI), and significant discrepancies between production and expenditure approaches. The IMF also highlighted data gaps in the large informal sector and MSMEs.

Sources said the Government said the Ministry is underway to revise the base year of Gross Domestic Product (GDP), Index of Industrial Production (IIP) and Consumer Price Index (CPI). The base year is revised periodically to better capture the structural changes happening in the economy by updating the methodology of compilation and incorporation of new data sources. The proposed new base year for the GDP and IIP is 2022-23, and for CPI, the proposed base year is 2024.

MoSPI to revise base years to improve accuracy of CPI

On inclusion of new data sources in CPI, the ministry said that, in addition to the data collected from physical outlets as being done in the current series, prices would also be obtained from e-commerce platforms in 12 selected cities having a population of more than 25 lakh. Efforts will also be made to procure administrative data in coordination with the railways for rail fares, the petroleum ministry for fuel prices, and the postal department for postal tariffs.

For airfares, telecom services, and OTT platforms, price data is proposed to be compiled from online sources using web-based methods, MoSPI said. “The adoption of these alternative and digital data sources is expected to substantially improve the representativeness, reliability, accuracy and overall quality of the CPI,” it added.

The new series of CPI (consumer price index-based inflation) with base year (2024-100) data is scheduled to be released on February 12, 2026. The data on National Accounts with financial year 2022-23 as base year is scheduled to be released on February 27, 2026, while the new series of IIP data with base year 2022-23 will be released on May 28.

The ministry is also expanding coverage across urban and rural markets, while also incorporating e-commerce price data and other digital sources to better capture changing consumption patterns. GDP base revision will also facilitate inclusion of new data sources and alignment of the compilation process with methodological improvements, standards and classifications.

MoSPI Secretary Saurabh Garg said the ministry is not expecting GDP expectations to change significantly even after the release of the new data series in February. “Too early to say, on its impact on GDP numbers. In general, we don’t expect many changes from what our previous expectations are,” he said.

The availability of real-time data, such as Goods and Services Tax Network (GSTN) filings, will help states estimate growth more accurately under the revised GDP methodology, he said. The Secretary further said the government now has the Annual Survey of Unincorporated Sector Enterprises (ASUSE), which will help further improve data quality.

GDP estimation methods not inferior: CEA

New Delhi: Chief Economic Advisor V Anantha Nageswaran on Tuesday said all estimate methodologies have some limitations, but the mindset that India’s methods for estimating GDP are inferior needs to change.

Against the backdrop of persisting concerns in certain quarters about the country’s economic growth figures, Nageswaran highlighted that concerns are raised only when GDP numbers surprise on the upside, while there are no questions about the methodology when the data disappoints.

“It is not as if the Indian GDP numbers are overstating the GDP case, but unfortunately, all these. Under-informed or half-baked questions are left deliberately hanging to sow the seeds of doubt in people, and it does not necessarily serve any purpose because they are not rigorous,” the CEA said.

He was addressing various stakeholders at the pre-release consultative workshop on base revision of CPI, GDP and IIP organised by the Ministry of Statistics and Programme Implementation in the national Capital.