Source: The Hindu

Context and GDP Rebasing

• GDP measures the value of goods and services produced within an economy and is periodically revised to incorporate better data, methodologies and structural changes.
• India has introduced a new GDP series with 2022–23 as the base year, resulting in revisions to both growth estimates and the nominal size of the economy.
• GDP rebasing changes the statistical reference point; therefore, a lower estimated GDP does not automatically imply that actual economic activity has contracted.
• Under the revised series, nominal GDP was approximately:
• 7% lower in 2022–23.
• 3.5% lower in 2023–24.
• 3.8% lower in 2024–25.
• Similar revisions have occurred internationally and in India’s earlier shift from the 2004–05 to the 2011–12 base year.

Sector-wise Impact of the Revision

• The revisions are therefore not uniformly downward; they reflect a substantially different measurement of individual sectors.
• The sharp revision in trade and transport indicates that previous estimates had limitations in capturing activity in these segments.
• The revised series provides a more differentiated picture of the structure and contribution of various sectors to the economy.

Unincorporated Sector: Major Source of Change

• A major reason for the revision is improved measurement of the unincorporated sector, which includes numerous small businesses and informal enterprises.
• Under the previous 2011–12 series, benchmark estimates for this sector were often updated using indirect proxy indicators.
• The new methodology makes greater use of:
• Annual Survey of Unincorporated Sector Enterprises (ASUSE).
• Periodic Labour Force Survey (PLFS).
• These datasets provide more direct information on enterprises, employment and economic activity in the informal sector.
• The World Bank’s April 2026 India Development Update attributed a 3%–4% downward revision in nominal GDP across FY23–FY26 to reassessment of the informal economy.

Why Lower Nominal GDP ≠ Economic Contraction?

• Nominal GDP measures output at current prices, while real GDP adjusts for price changes and is more relevant for assessing actual volume growth.
• GDP estimates are periodically revised as more comprehensive information becomes available, including data from GST collections and industrial production.
• When the estimate for the base year is revised, subs