India is changing the way it measures its economy by updating the base year for calculating Gross Domestic Product (GDP).
Here's a simple explanation:
What is GDP? GDP is a way to measure the total value of all goods and services produced in a country in a specific time. It's a key indicator of a country's economic health.
What is a base year? A base year is a reference year used to compare economic data over time. It's like a starting point. Its value is set to 100. When comparing GDP in other years, you compare it to the base year to see how much the economy has grown or shrunk.
Why change the base year? The current base year is 2011-12. The Indian economy has changed a lot since then. New industries have emerged, technology has advanced, and the economy has recovered from the pandemic. Using an old base year can give an inaccurate picture of the current economy.
What's the new base year? It will be 2022-23.
What will this change? This change will:
Give a more accurate picture of the current state of the economy.
Help the government make better economic policies.
Make India's GDP figures more consistent with other economic measures.
Who is in charge of this? A 26-member committee led by Biswanath Goldar is working on this change.
How is GDP calculated in India? India uses two main methods:
Factor cost method: Looks at the performance of eight key sectors like agriculture, manufacturing, and services.
Expenditure method: Looks at how much money is spent on things like household consumption, investments, and government spending.
Who collects the data? The Central Statistics Office (CSO) collects the data needed to calculate GDP.
In simple terms: India is updating its system for measuring the size of its economy (GDP). They're changing the "starting point" (base year) to make the measurements more accurate and reflect the current state of the economy. This will help the government make better decisions about the economy.