Context: The Government of India has announced its decision to revise the base year for the calculation of Gross Domestic Product (GDP) from 2011-12 to 2022-23, marking a significant update to the country’s national accounting framework.

• 26-member Advisory Committee on National Accounts Statistics (NAS) under chairmanship of Biswanath Goldar has been formed to identify new data sources & refine methodology for compiling NAS.

• Central Statistics Office brings out NAS annually which includes GDP estimates from multiple approaches. 

About An Advisory Committee on National Accounts Statistics (ACNAS) 

• It has been constituted to facilitate the transition. The committee includes representatives from central and state governments, the Reserve Bank of India, academia, and research institutions.

• Its primary role will be to identify new data sources and provide recommendations on the methodology for compiling national accounts in the revised series.

• As part of efforts to strengthen the statistical system, the government has undertaken several initiatives. These include the establishment of ACNAS, the standardization of data structures to ensure harmonized and high-quality reporting across the National Statistical System, and the increased utilization of administrative data.

What is Base Year?          

• Base year is a benchmark used for GDP calculation. It allows for comparison  of economic growth over a period of time by eliminating the effects of inflation.

Need of Base Year Revision

• Incorporating New Data Sources: Availability of high-frequency quality data has improved since 2011-12 due to digitization & various sectoral developments. 

• Its incorporation will improve precision of GDP calculation.

• Accommodating Structural Changes: New base year will account for shifts in consumption patterns, sectoral contributions, & inclusion of emerging sectors seen in past decade.

• Previous base year, 2011-12, established in January 2015 is considered outdated for current economic realities.

• Others:  Accommodation of Post-Pandemic economic dynamics & adhering to International standards for global comparability.

Implications

• It may lead to revised growth estimates;

• A more accurate representation of India's economic activity aid policy formulation & improve investor confidence etc.