India Plans Major Overhaul of GDP Methodology Ahead of 2026 Revision

India Looks to Overhaul GDP Methodology Ahead of 2026 Revision

In a move that could significantly change the way the world’s fastest-growing major economy measures its output, India looks to overhaul GDP methodology ahead of the comprehensive national accounts revision set for February 2026. The Ministry of Statistics and Programme Implementation (MoSPI) on November 21 released a detailed discussion paper outlining wide-ranging methodological reforms that aim to bring India’s statistical systems closer to global best practices while fixing long-standing data gaps.

The overhaul comes more than a decade after the last major revision and signals a decisive shift toward more granular, technology-driven and representative economic measurement.

New Base Year and Expanded Datasets to Reshape India’s GDP Framework

As India looks to overhaul GDP methodology, one of the most consequential changes is the adoption of 2022–23 as the new base year. The choice of a more recent base year is expected to provide a clearer picture of post-pandemic structural shifts and the country’s accelerating digital transformation.

MoSPI’s paper indicates that the revised GDP series will integrate fresh datasets that were not available during the previous revision. These include:

• A more accurate and updated list of active companies

• Comprehensive Limited Liability Partnership (LLP) filings

• Improved disclosures from corporate annual returns

• A fuller Annual Survey of Unincorporated Enterprises (ASUSE)

Together, these additions are expected to strengthen estimates across key institutional sectors, particularly private corporations and MSME-heavy segments—areas where traditional datasets often struggled to capture the full breadth of economic activity.

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More Accurate Mapping of Multi-Activity Firms

A major improvement highlighted in the paper is the enhanced ability to map company-level turnover to specific business activities. When India looks to overhaul GDP methodology, this capability becomes critical for accurately allocating production across diverse operational segments instead of attributing all activity to a single dominant business line.

This refinement is especially important for large conglomerates and diversified MSMEs, where traditional classification rules often distorted the real contribution of various sectors.

Boosting Measurement of the Unincorporated Sector

One of the most persistent challenges in India’s GDP estimation has been measuring the unincorporated sector, which includes millions of small enterprises and informal workers. MoSPI plans to rely more heavily on:

• ASUSE

• Periodic labour force surveys

• Improved cross-survey data calibration

These steps are expected to capture economic activity more accurately in retail trade, traditional services and household-run microbusinesses. As India looks to overhaul GDP methodology, strengthening this segment is crucial given its outsized role in employment and consumption.

Construction Sector Set for Major Recalibration

Construction—one of India’s fastest-expanding GDP components—will see significant methodological changes. MoSPI plans to adopt a modified commodity-flow approach, supported by a new pilot construction survey. This will help account for:

• Differences in material use

• Variations between pucca and kutcha structures

• Non-traditional building inputs gaining prominence

• Regional shifts in construction demand

Such refinements are expected to offer a more accurate breakdown of value addition in this labour-intensive sector.

Agriculture Estimates to Become More Granular and Dynamic

Agriculture, a sector undergoing structural transformation, will see updated input–output ratios and more detailed state-level datasets. This will ensure that production estimates reflect shifts in cropping patterns, mechanisation trends, weather variability and rising non-farm rural contributions.

Double Deflation in Manufacturing Brings India Closer to Global Standards

A standout feature of the proposed reforms is the expanded use of double deflation in manufacturing. Under this technique, input and output prices are deflated separately, allowing for a more accurate measure of real value-added.

As India looks to overhaul GDP methodology, double deflation represents a pivotal step in aligning India’s national accounts with international norms adopted by advanced economies such as the US and EU.

For other sectors, MoSPI will rely on single deflation or volume-extrapolation—methods described as the “second-best” alternatives given current data availability.

Expenditure-Side Changes and Back Series to Be Released Next Year

MoSPI stated that additional discussion papers will follow, including proposed reforms to the expenditure-side GDP estimation. The updated back series and revised national accounts will be released on February 27, 2026, alongside the second revised estimates for the fiscal year.

Economists expect the new methodology to offer a clearer, more authentic picture of India’s economic structure—especially as digitalisation, formalisation and services-sector expansion reshape the composition of GDP.

A Transformative Step for India’s Statistical Architecture

As India looks to overhaul GDP methodology, policymakers, economists and investors alike view the exercise as a transformative step toward improving the reliability, transparency and global credibility of India’s economic statistics. With richer datasets, improved sector mappings and globally aligned techniques, the revised framework is expected to provide sharper insights into India’s growth story in the years to come.