Context
The Ministry of Statistics and Programme Implementation (MoSPI) has introduced the 2022–23 base-year GDP series, replacing the 2011–12 series, with methodological changes aimed at improving the accuracy and coverage of national income estimates.
Key Methodological Changes
- Activity-Based Classification
- Earlier, enterprises with multiple activities were classified only by their dominant activity.
- The new series allocates GVA between manufacturing and services based on each activity’s contribution.
- MoSPI uses MGT-7/MGT-7A data from the Ministry of Corporate Affairs (MCA), covering activities with at least 10% of turnover.
- Government-Provided Housing Services
- The new series includes the value of housing provided to government employees in government-owned accommodation.
- It is estimated using construction costs, adjusted for maintenance, repairs and consumption of fixed capital. This improves the coverage of government-provided services in GDP.
- Revised Useful Life of Fixed Assets
- MoSPI has revised asset-life estimates used to calculate depreciation.
- For dwellings, the useful life is now 60–75 years, compared with 70–80 years
- The revisions consider technology, obsolescence, operating conditions, maintenance and regulations, improving GVA estimates.
- Improved Household Savings Estimates
- SEBI data is now used for financial instruments such as shares, debentures, mutual funds and hybrid securities, including Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs) and Alternative Investment Funds (AIFs).
- Estimated household savings in gold and silver ornaments for 2022–23 rose to ₹1.65 lakh crore, from ₹64,504 crore
- Estimates are based on the 2019 All India Debt and Investment Survey (AIDIS); a new survey began in July 2026 and is scheduled to conclude in June 2027.
- Inclusion of Rooftop Solar Electricity
- Electricity generated by households through rooftop solar panels for self-consumption is now included in GDP.
- For 2022–23 and 2023–24, estimates use Household Consumption Expenditure Surveys and population projections.
- From 2024–25, estimates use installed rooftop-solar capacity reported by MNRE and applicable electricity prices.
- It is included under electricity, gas, water supply and other utility services.
Significance
- Better Sectoral Measurement: Activity-based classification gives a clearer picture of manufacturing and services within multi-activity enterprises.
- Improved Capital Estimates: Revised asset lives provide more accurate estimates of depreciation and GVA.
- Wider Savings Coverage: New financial data improves measurement of household savings and investments.
- Better Renewable-Energy Coverage: Including self-consumed rooftop solar electricity captures economic activity missed by conventional electricity-sales data.
- More Comprehensive GDP: Together, these changes make national accounts better aligned with structural changes in the Indian economy.
Conclusion
The 2022–23 GDP series goes beyond a base-year revision by improving the measurement of production, government services, capital assets, household savings and renewable energy, making India’s national income estimates more comprehensive and representative.
FAQs
Q1. What is Gross Domestic Product (GDP)?
Ans: GDP is the total monetary value of all final goods and services produced within a country during a specific period.
Q2. What is Gross Value Added (GVA)?
Ans: GVA measures the value added by producers to goods and services, calculated as output minus intermediate consumption.
Q3. How does the new GDP series improve sectoral classification?
Ans: It allocates GVA between manufacturing and services based on the contribution of each activity rather than only the enterprise’s dominant activity.
Q4. Why has the useful life of fixed assets been revised?
Ans: It enables more accurate estimates of depreciation, thereby improving GVA and national-income estimates.
Q5. What is the role of the All-India Debt and Investment Survey (AIDIS)?
Ans: AIDIS provides data on household assets, liabilities and investments, supporting the estimation of household savings and wealth-related components of national accounts.
