3 days ago
New GDP Series Cuts Estimates by Rs 42 Lakh Crore
India changed the way it measures the size of its economy.
A research report says the new method makes earlier nominal GDP numbers smaller by Rs 42 lakh crore between FY23 and FY26.
It says the reduction also appeared in the first quarter of FY27.
The changes affected spending by households, the government and businesses.
The report believes better information about small, informal businesses helped reveal that earlier estimates were too high.
These businesses had not been regularly measured for several years.
Because some older information is missing, it may be difficult to create a perfectly comparable GDP history.
The report says future revisions could make the reductions even larger.
Systematix Group estimates that the revised 2022–23 GDP base reduced nominal GDP estimates by Rs 42 lakh crore across FY23–FY26.
The report says the downgrade averaged Rs 10 lakh crore annually and reached Rs 6 lakh crore in Q1FY27.
Reductions affected household consumption, government spending and fixed capital formation, indicating broad revisions across domestic demand measures.
Systematix attributes the changes partly to new informal-sector data from the Annual Survey of Unincorporated Sector Enterprises and other surveys.
The report says a future back-cast could reduce nominal GDP for FY16–FY26 by nearly Rs 100 lakh crore, though missing historical data may limit comparability.
- Who
- Systematix Group analyzed revisions made by the National Statistical Office to India’s GDP estimates.
- What
- A report says the revised 2022–23 GDP series reduced nominal GDP estimates by Rs 42 lakh crore for FY23–FY26.
- Where
- The revisions concern India’s national GDP estimates.
- When
- The reported reductions cover FY23–FY26, with an additional Rs 6 lakh crore cited for Q1FY27.
- Why
- Systematix says the new series incorporates informal-sector survey data and corrects earlier estimates that relied heavily on formal-sector proxies.
Systematix Group’s assessment
Statistical-series perspective
Reason for the GDP downgrade
Systematix Group’s assessment
Systematix says the reductions reflect long-standing overestimation caused by limited measurement of the informal economy and the use of formal-sector proxies.
Statistical-series perspective
The article does not provide a direct response from the National Statistical Office explaining the specific drivers of the revisions.
Historical comparability
Systematix Group’s assessment
Systematix says a fully comparable back-cast series may be unattainable because informal-sector data were missing for an extended period.
Statistical-series perspective
The revised 2022–23 series incorporates newer survey information, but the article says the National Statistical Office has not yet published a fully comparable historical series.
Key facts
- GDP reduction
- Rs 42 lakh crore across FY23–FY26, according to Systematix Group.
- Annual average
- About Rs 10 lakh crore of reduction per year during FY23–FY26.
- Q1FY27 reduction
- Rs 6 lakh crore in the first quarter of FY27.
- Potential FY16–FY26 revision
- The report estimates the cumulative reduction could approach Rs 100 lakh crore after historical data are recast.
- Affected components
- Household consumption, government spending and fixed capital formation.
- Informal-sector data
- The revised series uses the Annual Survey of Unincorporated Sector Enterprises and other surveys.
- Long-term nominal growth
- The report says average nominal GDP growth has slowed to 9%, compared with a recent peak of 16% in FY12.
Quotes
Systematix Group
Research and financial analysis group cited in the article
“The NSO has not explicitly explained the drivers behind the large, consistent downgrades in the new series, nor has it published a fully comparable historical series.”
deccanchronicle.com
“Indeed, there is a high possibility that even GDP numbers FY12 onwards may also undergo significant cuts.”
deccanchronicle.com
Sources
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