India will change the method it uses to calculate real gross domestic product when it releases a new national accounts series on February 27, government officials said. The revisions, intended to produce more accurate measures of output adjusted for inflation, include a shift to more detailed price deflation and the adoption of double deflation for value added.
Real GDP is produced by deflating nominal GDP growth using price indices. Economists had questioned India's earlier approach because it placed greater weight on the wholesale price index (WPI) rather than the more frequently monitored consumer price index (CPI). Officials now say the new series will use a substantially wider set of price items to deflate nominal output.
"We will now use about 500-600 items from the new CPI and the old WPI series, compared with about 180 earlier, to deflate the output and improve accuracy of the data," Saurabh Garg, secretary in the Ministry of Statistics and Programme Implementation, said in an interview. He added that this practice will continue until a revised WPI series is published, which is expected shortly.
Under the prior methodology, the combination of low nominal GDP growth and low wholesale inflation resulted in higher measured real growth rates than some analysts expected. Using the old series, India's economy is estimated to expand 7.4% in 2025/26, up from 6.5% in 2024/25. Nominal GDP is estimated to grow 8.0% in the current year.
The new GDP series will be based on a 2022/23 base year and will be released on February 27 along with back-series data covering the previous four years. The changes are part of a wider set of statistical updates that follow the rollout earlier this month of a revised retail inflation series. Revisions to wholesale inflation and industrial output series are also under way.
Statistical overhaul and external review
The revision responds in part to criticisms from international reviewers. In November, the International Monetary Fund highlighted weaknesses in India's national accounts methodology, noting an outdated 2011/12 base year, heavy reliance on wholesale prices and broad use of single deflation. The IMF assigned the framework a "C" rating.
At the center of the technical changes is the move to double deflation, which separates adjustments for output prices and input prices to arrive at real value added. Officials said that double deflation will reduce bias where input and output prices have diverged, an issue that had raised particular concern in manufacturing under the previous single-deflation system.
Implications for measurement
By expanding the number of price items used to deflate output and adopting double deflation, statisticians expect to tighten the link between nominal data and the real measures that underpin macroeconomic analysis. The revised series and accompanying back-cast data will provide updated growth trajectories measured on the 2022/23 base.
While officials have said the expanded deflation approach will remain in place until a new WPI series is ready, the full set of revisions to wholesale inflation and industrial output remain in progress.
Summary of changes announced
- New GDP series with 2022/23 base year to be released on February 27, with four years of back-series data.
- Deflation set expanded to about 500-600 items drawn from the new CPI and the old WPI, up from about 180 previously.
- Shift to double deflation to separately account for input and output price movements, aimed at improving accuracy in sectors such as manufacturing.