SDG 8: Decent Work and Economic Growth | SDG 17: Partnerships for the Goals
Ministry of Statistics and Programme Implementation (MoSPI) | NITI Aayog
The MoSPI discussion paper, titled ‘Changes in Methodology of Quarterly GDP series and Sub-national Accounts,’ proposes a major overhaul of national accounts to align with the new base year of 2022–23. These structural revisions are scheduled for official release on February 27, 2026
MoSPI is transitioning its benchmarking methodology from the traditional Pro-Rata method to the Proportional Denton method. This shift is designed to eliminate artificial discontinuities in data and better preserve the movement of high-frequency indicators. To improve accuracy, the new framework incorporates a vast array of granular data sources, including GST portal data, e-Vahan records, and real-time natural gas consumption.
Sectoral Precision and Expenditure Tracking
The revision introduces more sophisticated estimation techniques across key economic sectors to ensure data reflects current market realities:
Manufacturing and Construction: The ministry will now use GST-based indicators for output estimation and item-wise material inputs for construction to provide more dynamic and accurate growth figures.
Agriculture: Granularity is being enhanced through quarter-wise production estimates for an expanded list of crops.
Expenditure Side: Private Final Consumption Expenditure (PFCE) will move to an item-level estimation using the COICOP classification, while asset-wise indicators at a disaggregated level will be used for Gross Fixed Capital Formation (GFCF).
Sub-national Accounts and Institutional Reforms
A significant portion of the paper focuses on improving the consistency between National, State (SDP), and District (DDP) domestic products.
Institutional Sectoring: The economy is now strictly divided into five sectors, including Non-Financial Private Corporations and NPISH (Non-Profit Institutions Serving Households).
State-wise Allocation: Fixed base-year ratios are being replaced by dynamic GSTN data for allocating the Gross Value Added (GVA) of private corporations across states.
Government and Household Data: Central Government value added will be allocated using DDO code-wise PFMS data, while household sector estimates will utilize fresh data from the ASUSE and PLFS surveys.
What is the “Proportional Denton Method” in the new GDP methodology? The Proportional Denton method is a mathematical benchmarking technique used to align high-frequency quarterly data with more reliable annual figures. Unlike the older Pro-Rata approach, the Denton method ensures that the quarter-to-quarter growth rates (the “movement”) of the original indicators are preserved while making sure the sum of the quarters exactly matches the annual total. This prevents the “step problem,” where a sudden, artificial jump in data occurs at the beginning of a new financial year.
Policy Relevance
The shift to the 2022–23 base year and the adoption of high-frequency administrative data mark a pivotal move toward “real-time” economic governance.
Fiscal Accuracy: Utilizing GSTN and PFMS data for sub-national accounts ensures that states receive a more accurate reflection of their economic contribution, which is vital for Fifteenth Finance Commission-style fiscal devolutions.
Evidence-Based Policy: The move away from fixed base-year ratios to dynamic indicators like PLFS and ASUSE allows policymakers to track the informal and household sectors with unprecedented precision.
Global Synchronization: Adopting the FISIM method for financial services and granular price indices aligns India’s growth reporting with the latest UN System of National Accounts (SNA) standards, enhancing investor confidence.
Follow the full paper here: Discussion Paper on Changes in Methodology of Quarterly GDP series and Sub-national Accounts