Calibrating Afresh

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(Source: The Indian Express, Editorial Page)

Also Read: The Indian Express Editorial Analysis: 10 June 2025
Also Read: The Hindu Editorial Analysis: 10 June 2025

Topic: GS Paper 3: Growth and Development, Indian Economy, Transparency in Governance
Context
  • India plans to revise the base years for GDP and CPI calculations, a crucial statistical reform to reflect evolving economic realities.

  • The editorial highlights the urgency for methodological transparency as the country updates its core economic indicators.

  • Given previous controversies about GDP revisions, this moment becomes an opportunity to rebuild credibility in the national statistical framework.

Background:

  • India’s last GDP base year revision was in 2015 (to 2011–12), while CPI was last updated in 2012.
  • Since then, the economy has undergone structural shifts like GST, demonetisation, and digitisation. However, current data sources don’t fully incorporate newer sectors or informal transactions captured through GST/e-way bills.
  • Past revisions faced criticism for lack of transparency, especially after the GDP growth rate appeared inflated post-base revision.
  • The MoSPI (Ministry of Statistics and Programme Implementation) now faces the dual challenge of improving data robustness and winning public trust.

Why Revision Is Needed:

  • Economic indicators must reflect current consumption and production patterns.

  • GDP and CPI influence fiscal planning, welfare targeting, and inflation control.

  • New data sources (GST, digital economy) need integration for accuracy.

Concerns With Current Series:

  • The 2011–12 GDP base year overlooks post-2017 GST impact.

  • CPI weights from 2012 are outdated amid changing household spending.

  • Omission of gig economy, startups, and e-commerce causes data lag.

Importance of Transparency:

  • Past controversies (like withheld NSSO reports) damaged institutional trust.

  • Clear publication of methodologies fosters accountability and academic scrutiny.

  • Investors, credit rating agencies, and economists rely on credible data.

Statistical Reforms and Global Practice:

  • Countries like the UK revise GDP base every five years.

  • International standards (like SNA 2008) call for open data governance.

  • Independent audits improve perception and reliability of national data.

Way Forward:

  • India should regularise updates to economic indicators every five years and institutionalise independent audits.
  • Greater openness in data methodology will enhance democratic accountability and global investor confidence.

Comparison of Current vs Proposed Data Updates:

Indicator Current Base Year Issues with Current Base Proposed Improvement
GDP 2011–12 Excludes GST & digital economy data Include GST, e-way bills, updated sectors
CPI 2012 Outdated weightage; poor rural representation Reflect new consumption patterns post-pandemic
Statistical Process Opaque & irregular Delayed disclosures and lack of public review Transparent, audited, periodic revisions
Practice Question: Why is it important to periodically revise base years for GDP and CPI in India? What are the risks associated with data opacity in official statistics? (15 marks, 250 words)

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