Calibrating Afresh

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• CPI weights from 2012 are outdated amid changing household spending.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