​New reality, Pg6

Key Highlights:

• New national accounts data series released, updating the base year for India's GDP and GVA to 2022-23 from 2011-12.
• The new series projects GDP growth at 7.6% for the financial year 2025-26, surpassing the old series' prediction of 7.4%.
• India's economy is now estimated at ₹345.47 lakh crore in 2025-26, about 3.3% smaller than previous estimates.
• The economic size for both 2023-24 and 2024-25 has been revised downward by 3.8% each.

Detailed Insights:

• The update to the 2022-23 base year addresses the growing unrepresentativeness of the outdated 2011-12 series.
• Methodological improvements include the adoption of the double-deflator approach and proportional allocation of multi-sector company output.
• Data on households will be sourced annually from the Annual Survey of Unincorporated Sector Enterprises (ASUSE) and Periodic Labour Force Survey (PLFS).
• Goods and Services Tax (GST) data will be incorporated, enhancing the accuracy of consumer data analysis.
• The new series incorporates improved estimation methods for sectors like agriculture and the informal sector.
• The revised economic size impacts fiscal deficit and debt targets, making them more challenging to achieve.
• Despite the smaller economic size, aligning targets with accurate data is preferable for informed policy decisions.

Decoding the New GDP Series

Key Concepts Involved:

• GDP (Gross Domestic Product): The total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period.
• GVA (Gross Value Added): A measure of the total value of goods and services produced in an economy, less the value of intermediate consumption used in production.
• Double-Deflator Approach: An accounting method that considers the impact of inflation on both intermediate goods and final products to ascertain the real value added.