Economist NK Singh has defended the shift to a 2022-23 GDP base year, dismissing claims that the new double-deflation method artificially inflates growth. He states the change aligns India with global standards to better track sectoral productivity. For investors, this shift means historical data is no longer directly comparable, and it may affect how analysts calculate figures like the fiscal deficit during this transition.
Economist NK Singh, President of the Institute of Economic Growth, has addressed concerns surrounding the Indian government's recent overhaul of its GDP calculation methodology. The transition to a new 2022-23 base year has sparked debate among some analysts who questioned if the changes were designed to artificially inflate economic growth numbers. Singh firmly dismissed these allegations, characterizing them as technical misunderstandings rather than evidence of bias.
The centerpiece of this update is the adoption of the "double-deflation" method. In simple terms, the previous calculation approach was less granular when accounting for price changes. The new method independently adjusts the cost of intermediate inputs—such as raw materials—and the price of final finished goods. By doing this separately, the government aims to get a clearer picture of actual productivity in sectors like manufacturing, where input and output prices often move at different speeds. Singh argued that this approach is technically superior and aligns with the United Nations-endorsed System of National Accounts (SNA2008), making Indian economic data more comparable to global standards.
The implementation of these standards has led to immediate revisions in the national accounts. For example, Q1 FY26 GDP figures were re-pegged at Rs 80 lakh crore, an adjustment from the previous Rs 86.05 lakh crore calculated under the old 2011-12 base-year series. Official data released by the Ministry of Statistics and Programme Implementation also reported a 7.8 percent real GDP growth rate for Q1 FY27.
For market participants and investors, the key challenge is that this methodological reset makes direct, mechanical comparisons between the old series and the new series difficult. Comparing figures from the 2011-12 base with the 2022-23 base is often described as an "apples-to-oranges" exercise because the underlying structural weightings and calculation methods have changed significantly. Investors should be aware that analysts and brokerages may need time to recalibrate their models for growth and fiscal deficit targets, as the new base year changes the total nominal GDP figure against which government debt and deficits are measured.
Looking ahead, the most important factor for investors will be how the government and central bank communicate these numbers in upcoming policy reviews. As the new methodology becomes the standard, the market will focus on consistency in quarterly growth trends rather than absolute historical comparisons. Analysts will also be tracking whether this shift leads to more stable revisions in the future or if the transition period creates continued noise in the headline economic data.