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Ministry of Statistics & Programme Implementation (MoSPI) | National Statistics Office (NSO)
The Ministry of Statistics & Programme Implementation (MoSPI) has released the final report of the Sub-Committee on Methodological Improvements for the GDP Base Revision (2022–23), marking a structural overhaul of India’s national accounting framework.
The revision shifts decisively toward administrative data–driven estimation, embedding datasets such as GSTN, MCA-21, MGT-7/7A filings, PFMS, e-Vahan, ASUSE, and PLFS, replacing proxy-based extrapolations.
Core Methodological Improvements
Unincorporated Sector Reform: Adoption of the Labour Input (LI) method (replacing Effective Labour Input) using ASUSE and PLFS annual data, eliminating indicator-based extrapolation and reducing bias in estimating the largely informal workforce.
Corporate Sector Precision: Distribution of Gross Value Added (GVA) of multi-activity enterprises across industries using activity-wise revenue shares from company filings, instead of assigning firms to a single dominant sector.
Granular Non-Reporting Estimates: Use of disaggregated multipliers based on Paid-up Capital (PUC) by industry and size class, correcting distortions arising from varying capital intensity.
Enhanced Public Sector Valuation: Imputation of housing services provided to government employees and expanded coverage of autonomous institutes and local bodies under General Government, correcting historical under-measurement of public output.
Updated Technical Coefficients: Revision of sector-specific rates and input norms (including agriculture, fisheries, dairy, transport, and related services) using recent surveys and field studies, improving cost and output realism.
Refined Private Final Consumption Expenditure (PFCE): Adoption of COICOP 2018 classification and a mixed-method approach (HCES benchmarking, production-side data, and commodity-flow method), enhancing international comparability and consumption mapping.
Quarterly GDP Stability: Transition from pro-rata benchmarking to the Proportional Denton method in Quarterly National Accounts (QNA), reducing artificial breaks and preserving short-term economic movement.
Overall, the 2022–23 base revision embeds India’s formalisation, digitalisation, services diversification, and improved public sector measurement more accurately into macroeconomic statistics.
What is the “Proportional Denton Method” for QNA? The Proportional Denton Method is an advanced benchmarking technique used to generate quarterly series that are consistent with annual benchmarks while preserving the short-term movements (growth rates) of quarterly indicators. Unlike the traditional “Pro-Rata” method, which can create artificial discontinuities or “step problems” at the beginning of each financial year, the Denton method distributes annual revisions across all four quarters using a least-squares approach. By carrying forward the benchmark-indicator (BI) ratio of the final quarter of the previous year, it ensures that quarter-on-quarter changes in the forward-extrapolated series accurately replicate the movements of high-frequency indicators like GST collections or IIP.
Policy Relevance
GDP and national accounts form the backbone of fiscal planning, monetary calibration, intergovernmental transfers, investment strategy, and global credibility. The 2022–23 base revision is not a cosmetic rebasing; it corrects structural under-measurement and sectoral misallocation that previously distorted policy signals. Post-2026 GDP trends will more accurately reflect India’s ongoing formalisation, services diversification, digitalisation, and transport expansion, strengthening macroeconomic decision-making.
Strategic Impact:
Institutionalise Administrative Data Integration: Deepen formal data-sharing pipelines between MoSPI, GSTN, PFMS, RBI, and transport registries to sustain the shift from proxy-based estimation to near-real-time economic measurement, improving shock responsiveness.
Correct Corporate Sector Bias: Industry-specific Paid-up Capital (PUC) multipliers reduce “missing company” distortions, ensuring emerging investment cycles — including high-technology and AI-linked capital formation — are better captured in output estimates.
Leverage Refined Consumption Metrics: Alignment of PFCE with COICOP 2018 enhances global comparability and improves targeting of welfare schemes, inflation diagnostics, and consumption-linked fiscal tools.
Strengthen Federal Statistical Capacity: Upgrading state statistical systems is essential to ensure regional accounts and decentralised planning remain consistent with the new admin-data-driven framework.
Communicate Methodological Breaks Clearly: Transparent guidance to ministries, states, investors, and researchers is critical to avoid misinterpretation of growth shifts following rebasing.
Embed Ex-Post Methodological Audits: Periodic technical reviews of household and corporate estimation methods will help detect emerging biases as the economy continues to formalise and digitise.
Utilise Smoother Quarterly Series: The improved QNA (Denton benchmarking) strengthens short-term growth monitoring and monetary-fiscal coordination.
Why Does This Matter?
GDP (Gross Domestic Product) is like a “health report card” for the country. However, the way we measure it needs to be updated every few years because the economy changes—new businesses emerge, technology evolves, and the way people spend money shifts. The 2022-23 Base Revision is a major upgrade to this report card, moving away from “best guesses” (indicator-based estimates) toward actual data from GST, company filings, and national surveys.
Key Improvements in Simple Terms
1. Capturing Multi-Talented Companies
The Old Way: If a company made both cars and software, the government would often count all their profit under “Manufacturing.”
The New Way: We now look at the company’s revenue share. If 30% of their money comes from software, that 30% is correctly counted under the “IT/Services” sector. This gives a much more accurate picture of which parts of the economy are actually growing.
2. Counting “Silent” Businesses (Unincorporated Sector)
The Problem: Small shops, street vendors, and home-based businesses (the informal sector) are hard to track. Previously, the government “guessed” their growth based on larger companies.
The Solution: We now use the Annual Survey of Unincorporated Sector Enterprises (ASUSE) and the Periodic Labour Force Survey (PLFS). This means the 85% of Indians working in this sector are finally being measured using real, annual surveys instead of outdated assumptions.
3. Measuring Government “Value” Properly
The Change: The government provides services that aren’t “sold” in a market (like public parks or free healthcare). The new series now includes the value of housing provided to government employees and covers more local bodies (panchayats and municipalities). This ensures the government’s contribution to the economy isn’t under-measured.
4. The “Denton” Method: Smoother Growth Tracking
The Techy Part: Previously, moving from quarterly data to yearly data could cause “jumps” or “breaks” in the charts (the “step problem”).
The Fix: By switching to the Proportional Denton Method, the government ensures that quarterly growth trends are smooth and match the final yearly figures without artificial distortions.
Sector-Specific Updates (The “Realism” Check)
The report updates the “Technical Ratios”—the formulas used to convert raw data into economic value.
Agriculture: Updated norms for seed, diesel, and fodder consumption based on recent field studies.
Transport: Using e-Vahan (vehicle registration) data to track exactly how many commercial vehicles are on the road.
Spending: Aligning how we track what people buy with international standards (COICOP 2018), making it easier to compare Indian consumption with the rest of the world.
Follow the full report here: MoSPI: Methodological Improvement Report - February 2026