Unravelling the complexities of India's 2011-12 GDP series is key

Gross domestic product estimation is complex and its details need to be understood in depth for effective policy and research

GDP numbers are commonplace in macroeconomic discussions. However, the numbers involve several complexities, ranging from data, methods, revisions, base year changes and the challenges of a changing economy. While data, methods or revisions are an ongoing part of the compilation exercise, base-year revisions stand out separately.

The rationale for periodically updating the base year in national accounts lies in capturing structural transformations within an economy. In the Indian context, base year revisions traditionally occurred every five years, which were aligned with the quinquennial surveys conducted by the National Sample Survey Office (NSSO). Nevertheless, since 2004-05, our base year revisions have experienced a staggered pattern due to a multitude of factors.

The financial crisis of 2009-10 prompted the selection of 2011-12 as the base year instead of 2010-11, with the revised series only being unveiled in 2015. Throughout the decade following the last base year revision (2011-12), the Indian economy underwent a series of significant structural shifts, policy-induced macro-economic changes and covid-induced economic crises. Regrettably, these developments were not fully captured due to the unavailability of a suitable ‘normal’ year to serve as the base, updated data and the irregular scheduling of NSSO surveys during this period.

In the 2011-12 series, numerous conceptual and statistical changes were incorporated, with the aim of aligning the series with recommendations of the System of National Accounts (SNA) 2008. These changes resulted in significant revisions to the levels and growth rates of various sub-sectors, ultimately impacting the trends of aggregate gross domestic product (GDP).