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India’s New GDP Series: GST, Corporate Data And New Methodology

IAS Current Affairs

India’s New GDP Series

Source: Indian Express
GS III: Indian Economy

Overview

  • India’s new GDP methodology updates the base year to 2022–23 and incorporates newer data sources to better reflect the present structure of the economy.
  • Greater use of GST records, corporate filings, LLP data, ASUSE and PLFS aims to improve the measurement of both organised and unincorporated economic activity.
  • Methodological improvements such as double deflation, Supply and Use Tables and updated industrial classification seek to enhance the accuracy and consistency of national accounts.
  • The revised framework reflects the growing importance of formalisation, services and digitalisation, while highlighting the need for reliable data, transparency and regular statistical improvements.

Why in the News?

The Ministry of Statistics and Programme Implementation (MoSPI) has released “Sources and Methods for Compilation of National Accounts Statistics”, explaining the methodology behind India’s new GDP series.

News in Brief
  • Greater use of company-level filings, GST records and LLP data for estimating private corporate-sector activity.
  • ASUSE and PLFS are used for more direct estimation of the household and unincorporated sector.
  • MGT-7/MGT-7A filings help distribute value added across different activities of multi-activity companies.
  • The methodology also improves deflation, Supply and Use Tables (SUT), economic classifications and revision practices.
Key Highlights

Base Year 2022-23

  • The GDP base year has been revised from 2011-12 to 2022-23, making the national accounts more representative of the present structure of the Indian economy.
  • This is the eighth base-year revision of India’s National Accounts Statistics.
  • A base-year revision is important because the consumption of an economy changes over time.
  • New industries emerge, consumption patterns evolve, and the relative importance of different sectors changes.
  • Using a more recent base year therefore helps ensure that economic growth is measured against a more relevant economic structure.

Corporate Data

  • Corporate filings and LLP records are used to improve industry classification, measure economic activity and allocate output among companies operating across multiple sectors.
  • Earlier, diversified companies were largely assigned to their principal activity.
  • The new methodology uses activity-wise turnover information from MGT-7/MGT-7A filings for more accurate allocation of value added.
  • This provides a more detailed picture of the activities undertaken by companies and helps capture the changing nature of India’s corporate sector.
  • It is particularly relevant as formal enterprises and organised economic activity have expanded over the years.

GST Data

  • GST data is used for,
      • allocating private corporate-sector estimates across States
      • cross-checking annual estimates
      • quarterly national accounts estimation and
      • validating estimates from other sources.
  • Thus, GST provides an important administrative-data source alongside traditional surveys.
  • The use of GST data also reflects the increasing formalisation of economic activity.
  • Since GST records generate information on registered businesses and transactions, they can complement survey-based information and provide additional evidence for national accounts estimation.

Unincorporated Sector

  • The new framework uses Annual Survey of Unincorporated Sector Enterprises (ASUSE) and Periodic Labour Force Survey (PLFS) for direct estimation of the household and unincorporated sector, reducing dependence on proxy indicators.
  • This is significant because a large number of enterprises in India operate outside the organised corporate sector.
  • Better measurement of this segment can provide a more comprehensive picture of employment, production and income generation across the economy.

Double Deflation

  • The new series uses double deflation, particularly for manufacturing.
  • It separately adjusts output and input prices, helping obtain a more accurate measure of real value added.
  • The framework also uses more granular price indices.
  • Double deflation is important because changes in input and output prices may not move at the same rate.
  • Separately accounting for these changes can improve the measurement of real economic activity.

Supply and Use Tables

  • Supply and Use Tables (SUT) help reconcile production and expenditure estimates by matching the supply of goods and services with their uses.
  • This improves the internal consistency of national accounts.
  • They provide a framework for examining how goods and services produced in different parts of the economy are ultimately used by households, businesses, government and other sectors.

Updated Classification

  • The new series uses National Industrial Classification (NIC)-2025, improving coverage of contemporary economic activities, including service-sector and IT/ITES activities.
  • An updated classification helps statistical systems capture newer forms of economic activity and better reflect the transformation of India’s production strucutre.
Why is it important?
  • India’s economic structure has changed considerably since 2011-12, with the expansion of digital businesses, formal enterprises, GST- registered firms and modern services.
  • Using GST records. corporate filings, surveys and high-frequency indicators can improve the coverage, consistency and timeliness of GDP estimates.
  • The greater use of administrative and corporate data also reflects the growing formalization and digitalization of the Indian economy.
  • At the same time, combining different sources can help cross-check estimates and reduce excessive dependence on a single data source.
  • However, administrative-data-based estimation also makes data quality, validation, consistency, and confidentiality, important considerations.
Revision of GDP Estimates
  • GDP estimates are revised as additional and more comprehensive data become available.
  • MoSPI states that its revision policy follows international practices, including SNS 2008 and the IMF Quarterly National Accounts Manual.
  • Such revisions are a normal part of national accounting.
  • Initial estimates are often prepared using available information and are subsequently updated when more complete datasets become available.
  • A transparent revision process is therefore important for maintaining the credibility and usefulness of national income statistics.
Conclusion

The revised framework seeks to make national accounts more responsive to the evolving nature of economic activity in India. Its effectiveness will ultimately depend on reliable data, methodological transparency and regular improvements in statistical capacity, enabling GDP estimates to better support evidence-based policymaking and economic planning.

UPSC Prelims and Mains Practice Question

Consider the following statements:

  1. The base year for the new GDP series is 2022–23.
    GST data has no role in GDP estimation.
  2. ASUSE and PLFS improve estimation of the household and unincorporated sector.
  3. Corporate filings are increasingly used to estimate private corporate-sector activity.

Which of the statements given above are correct?

A. 1, 3 and 4 only
B. 1 and 2 only
C. 2 and 3 only
D. 1, 2, 3 and 4

Answer: A

Mains Practice Question

Q) The revision of India’s GDP methodology reflects the changing structure of the Indian economy. Discuss with particular reference to the role of formalization, services and digitalization. (250 words)

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