Revision of India’s GDP Series

Context

India’s Ministry of Statistics and Programme Implementation (MoSPI) is revising the GDP data series with a new base year of 2022-23. As part of this revision, the government plans to eliminate the ‘discrepancies’ component in GDP calculation and publish a full back series by February 2027. A discussion paper has been released seeking public comments by January 7, 2026.

What is GDP Revision and the ‘Discrepancies’ Component?

1. Gross Domestic Product (GDP): GDP measures the total value of goods and services produced in an economy during a specific period. It is the most important indicator of economic growth.
2. Methods of Calculating GDP in India: India calculates GDP using two main approaches:
   1. Production (or Income) Approach – adds value added by different sectors like agriculture, manufacturing, and services.
   2. Expenditure Approach – adds total spending such as private consumption, government consumption, investment, net exports, etc.
3. What are ‘Discrepancies’?
   1. Since the two approaches use different data sources, timings, and valuation methods, their final GDP estimates often do not match.
   2. This difference is shown as ‘discrepancies’ under the expenditure approach.
   3. The expenditure approach is considered less accurate, so discrepancies are recorded there.
4. Meaning of Positive and Negative Discrepancies
   1. Positive discrepancy: Production-side GDP is higher than expenditure-side GDP.
   2. Negative discrepancy: Expenditure-side GDP is higher than production-side GDP.

Why is the GDP Series Being Revised?

1. Large and volatile discrepancies make it difficult to understand the real drivers of GDP growth.
2. In July-September 2025, when GDP grew by 2%, discrepancies were ₹1.63 lakh crore (3.3% of GDP) in real terms.
3. In nominal terms for the same quarter, discrepancies were negative ₹2.46 lakh crore (-2.9% of GDP).
4. Discrepancies have shown sharp swings in recent years, especially after COVID-19.
5. The current GDP series relies on old survey data, some more than a decade old.

How the New GDP Series Will Work?

1. New Base Year
   1. The revised GDP series will use 2022-23 as the base year.
   2. First GDP estimate under the new series will be released on February 27, 2026 (for Oct-Dec quarter).
2. Elimination of Discrepancies
   1. MoSPI plans to remove the discrepancies component instead of showing it separately.
   2. This will be done by carefully examining data using accounting rules under the System of National Accounts (SNA) and correcting errors.
3. Use of Supply and Use Tables (SUTs)
   1. Supply and Use Tables will be integrated into annual GDP compilation.
   2. These tables ensure that total supply of goods and services equals total use, including consumption, investment, and exports.
   3. This will help limit discrepancies in early estimates and eliminate them in final estimates.
4. Back Series Publication
   2027. GDP back series using the new base year will be published within one year, by February 2027.
   2028. This allows meaningful comparison of growth over time.

Implications of the Revised GDP Series

1. GDP data will become more accurate, transparent, and reliable.
2. Eliminating discrepancies will make it easier to understand the true sources of economic growth.
3. Future GDP revisions may become smaller and more stable.
4. Policymakers, investors, and analysts will get clearer signals about economic performance.
5. Updated data will improve policy design, especially fiscal and monetary decisions.

Challenges and Way Forward

Conclusion

Revising the GDP series with a new base year and removing discrepancies is a major step towards improving India’s economic statistics. If implemented carefully, it will enhance credibility, reduce confusion, and support better policymaking in the years ahead.