Pacific Money | Economy | South Asia

India’s GDP Revisions Explained: What Changed and Why it Matters

India has revised its methodology for measuring economic growth after a decade. Better calculations matter, but the real test lies in how policymakers interpret them, and turn them into decisions that shape everyday life.

Amid the ongoing crisis in West Asia, the Indian economy is expected to take a hit: the World Bank’s latest projections suggest that the country’s GDP growth could fall to 6.6 percent in this financial year.

The government’s own projections, released earlier this year, tell a more upbeat story though – GDP growth of 7.6 percent in the current financial year, after recent updates were made in the way India measures economic growth. The update itself was the result of a revision of the base year for computation of the GDP from 2011-12 to 2022-23, done by the Ministry of Statistics and Program Implementation.

A revision such as this is usually conducted once in every five years, where a “normal” year (without any major shocks or unusual activities) is chosen as the new base year. For India, disruptions in economic activity from the rollout of the GST (Goods and Services Tax) in 2017 and COVID-19 delayed this revision.

The previous GDP series of 2015, where the base year was revised to 2011-12, was an update fraught with controversies. In 2018, this debate intensified: the bone of contention was the new methodology, new datasets, and the revised figure of 8.6 percent growth in 2018 (instead of 8.3 percent).

This time, the revisions came after a decade, and the implications are big.

While the back series of GDP estimates (with base year 2022-23) since 1950-51 – each time the base year is revised, the entire series is recalculated – is scheduled to be released in December 2026, the comparisons between the old and the new series since 2022-23 have been presented by the government already this year.

According to the government, the total GDP estimates for India for 2022-23 have come down by 2.9 percent, and for 2023-24 and 2024-25, they have come down by 3.8 percent each in both years, which means that the GDP was previously overestimated.

The annual GDP growth rates were also revised from 9.2 percent to 7.2 percent for FY2023-24, and from 6.5 percent to 7.1 percent for FY2024-25.

When we consider spending in the economy, the situation appears more worrying – both household spending and investment in new assets and infrastructure slowed down in 2024-25.

This exercise focusing on changes in the methodology of estimating the GDP follows a downgrading of India’s national account statistics to a C grade – the second lowest grade – by the IMF in November 2025.

Such periodical revisions raise an important question – do these numbers simply end up as fancy graphs in newspapers and in power point presentations, or do they actually translate into a better economic understanding of human lives?

The main purpose behind this routine exercise is to achieve a higher accuracy in GDP estimation in the event of changing production conditions, consumption patterns and the macroeconomic structure.

Since the process of estimating the GDP of a country like India is a herculean exercise – requiring information of every single economic activity – this is achieved using approximations at different levels, which themselves are rooted in certain extrapolations and proxy markers.

For instance, the production of raw tea is estimated at 4.44 times the production of processed tea according to the data available from the Tea Board. Similarly, until the recent revision the gross value added in cable, recording, and broadcasting services was calculated on the basis of the share of population having television (from the Census........

© The Diplomat