Context: The updated new base year for national accounts and other macro-indicators is expected to come into effect from January-February 2026, coinciding with the first and second advance estimates of national income for FY26.

What is base year?

• The base year for national accounts and macro-indicators such as GDP, CPI, WPI, and IIP serves as a benchmark to measure economic performance and inflation trends accurately.

• Previous Base Year: India's last update was in January 2015, setting 2011-12 as the base year, replacing the older 2004-05 base year. This update was in line with NSC recommendations for periodic revisions.

• Establishment of ACNAS: The Ministry of Statistics and Programme Implementation has set up the Advisory Committee on National Accounts Statistics (ACNAS). ACNAS will advise on the selection of the new base year for GDP and ensure alignment with other macro-indicators.

• The new base year is slated to take effect from January-February 2026. This timeline coincides with the release of the first and second advance estimates of national income for FY26, ensuring a seamless transition.

• The development comes at a time when the government is planning to update the base year for major macro-indicators such as:

1. Gross Domestic Product (GDP)

2. wholesale price index (WPI) used for wholesale inflation

3. consumer price index (CPI) used to determine consumer inflation,

4. index of industrial production (IIP) used for calculation of industrial growth

Important Concepts

• GDP (Gross Domestic Product): GDP measures the total monetary value of all finished goods and services produced within a country's borders in a specific time period (usually annually or quarterly). It is a key indicator of the economic health and size of a country's economy.

• WPI (Wholesale Price Index): The WPI measures and tracks changes in the price of goods traded in bulk by wholesale businesses. It is used to calculate inflation at the wholesale level and serves as an indicator of cost pressures in production.

• CPI (Consumer Price Index): The CPI measures changes in the prices paid by consumers for a basket of goods and services. It is a crucial indicator of inflation as experienced by households and is used to adjust income and assess economic policies.

• IIP (Index of Industrial Production): The IIP measures the changes in the volume of production in the industrial sector of an economy over a specific period. It provides insights into the growth or contraction of industrial output, including manufacturing, mining, and electricity generation.