New GDP Series May Recast Growth, Deficit Math

India will release a new GDP series this week, updating the base year to 2022–23 from 2011–12 in a revision that could have significant implications for fiscal calculations and monetary policy.

The new series, to be published by the National Statistics Office on Friday, will incorporate updated consumption patterns, new data sources, and methodological changes aimed at improving data accuracy.

The revised estimates draw on inputs such as goods and services tax filings, e-Vahan vehicle registration data, and digital payment transaction data. The methodology shifts to a mix of double deflation and volume extrapolation. Under double deflation, output and intermediate consumption are deflated separately to derive real value added. In the earlier series, a single price index was applied to both, an approach that could overstate real growth when input price inflation exceeded output price inflation.

The revision is part of a broader overhaul of official statistics. Earlier this month, the statistics office released a new CPI series. While headline inflation was broadly similar to the previous series, the updated data suggested underlying price pressures may have been lower than earlier estimated.

India’s official statistics have faced scrutiny in recent months. In November, the International Monetary Fund rated India’s national accounts statistics at “C”, indicating certain methodological and transparency shortcomings.

Alongside the new base-year series, the statistics office will release quarterly GDP estimates for October-December, the second advance estimate for 2025-26, the first revised estimates for 2024-25, and final estimates for 2023-24, all recalibrated to the new framework.

An average of estimates from four banks pegs October-December GDP growth at 8.0%, well above the Reserve Bank of India’s 7.0% projection made in December.

Previous base-year revisions have materially altered India’s growth profile. The shift to the 2011-12 series in 2015 recast 2013-14 growth at 6.9%, compared with 4.7% under the earlier methodology. Then RBI Governor Raghuram Rajan and then Chief Economic Adviser Arvind Subramanian had both raised doubts about the higher growth estimate.

“We find it hard to see the economy as rollicking in 2013-14,” Rajan had said at the time. Subramanian described the acceleration as “puzzling”, noting that the year had been widely regarded as economically weak.

In addition to changing the base year from 2004-05 to 2011-12, the 2015 revision also shifted the headline measure from GDP at factor cost to GDP at market prices.

The latest revision could have fiscal implications. The Union Budget for 2026-27 projects a fiscal deficit of 4.3% of GDP under the existing series. Any upward revision to nominal GDP would mechanically lower the deficit ratio, potentially allowing the government to increase spending without breaching the headline fiscal deficit target.

For monetary policy, stronger growth estimates could reduce pressure on the Monetary Policy Committee to ease interest rates. 

As with past revisions, the real impact may not lie in the headline number, but in how it reshapes the story policymakers, markets and investors tell about the economy.