{"id":85294,"date":"2026-09-22T18:35:14","date_gmt":"2026-09-22T13:05:14","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=85294"},"modified":"2026-09-22T18:35:40","modified_gmt":"2026-09-22T13:05:40","slug":"national-accounts-methodology-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/22-09-2026\/national-accounts-methodology-india","title":{"rendered":"India\u2019s New National Accounts Methodology"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>MoSPI released the <strong>8th revised National Accounts Series with 2022-23 as the base year in 2026<\/strong>, introducing methodological changes, notably <strong>double deflation in manufacturing GVA<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What are National Accounts?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>National Accounts Statistics (NAS)<\/strong> provide a systematic picture of an economy\u2019s production, income and expenditure.\u00a0<\/li>\n\n\n\n<li>They measure aggregates such as <strong>GDP, GVA, consumption, investment, saving and external trade<\/strong>, following the framework of the <strong>UN System of National Accounts (SNA)<\/strong>.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Evolution of Base Year<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India has revised its national-accounts base year periodically.<\/li>\n<\/ul>\n\n\n\n<p><\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-full is-resized\"><img data-dominant-color=\"e4e4e4\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"452\" height=\"399\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/09\/image-171.png\" alt=\"\" class=\"not-transparent wp-image-85295\" style=\"--dominant-color: #e4e4e4; aspect-ratio:1.1328372821617387;width:357px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/09\/image-171.png 452w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/09\/image-171-300x265.png 300w\" sizes=\"auto, (max-width: 452px) 100vw, 452px\" \/><\/figure>\n<\/div>\n\n\n<p><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The objective is to incorporate structural changes, improve data sources and ensure that constant-price estimates better represent the contemporary economy.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Calculation Methodology<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>GDP can be viewed through three approaches:\n<ul class=\"wp-block-list\">\n<li><strong>Production Approach:<\/strong> GVA of industries + taxes less subsidies on products.<\/li>\n\n\n\n<li><strong>Expenditure Approach:<\/strong> Final consumption + gross capital formation + exports \u2212 imports.<\/li>\n\n\n\n<li><strong>Income Approach:<\/strong> Compensation of employees + operating surplus\/mixed income + taxes less subsidies.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>For real GDP\/GVA, current-price values need to be adjusted for price changes through appropriate deflators.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Change: Double Deflation in Manufacturing<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Under the earlier approach of<strong> using a single price index<\/strong>, nominal manufacturing GVA is converted into real GVA using an aggregate deflator.\n<ul class=\"wp-block-list\">\n<li>The 2022-23 series introduces <strong>double deflation<\/strong> for manufacturing that separately adjusts:\n<ul class=\"wp-block-list\">\n<li><strong>Value of goods produced by manufacturers<\/strong>, and<\/li>\n\n\n\n<li><strong>Cost of inputs consumed in production<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>MoSPI uses <strong>ASI data<\/strong> and <strong>elementary item-level output Producer Price Indices (PPI)<\/strong> based on ex-factory prices, released by the Office of the Economic Adviser, DPIIT.<\/li>\n\n\n\n<li>The <strong>output PPI <\/strong>covers both <strong>final and intermediate goods<\/strong>, including wheat, milk, bauxite, coking coal, electricity, refined palm oil, besan, cotton yarn, sacks\/gunny bags, leather, naphtha, phosphoric acid, cement and semi-finished iron and steel.\n<ul class=\"wp-block-list\">\n<li>Thus, the output price of one industry can serve as an input price for another.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Items representing <strong>80% of output and input value<\/strong> are selected after ranking by value. ASI-derived weights are then used to deflate individual items separately.<\/li>\n\n\n\n<li>Two of the <strong>30 manufacturing categories<\/strong> i.e. <strong>processed food and oils <\/strong>and <strong>pharmaceuticals <\/strong>are <strong>excluded <\/strong>because imported-input shares are high and direct mapping with elementary output PPI is difficult.<\/li>\n\n\n\n<li>For service inputs without PPIs, <strong>consumer prices and implicit deflators<\/strong> are used.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Other Important Changes<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The new series revises the treatment of <strong>defined-benefit pensions<\/strong> by estimating the present value of pension entitlements accruing to serving government employees, rather than using pension payments to retirees as a proxy.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Significance<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Double deflation can provide a <strong>more theoretically appropriate measure of real manufacturing GVA<\/strong>, because changes in both output prices and input prices are captured separately.\u00a0<\/li>\n\n\n\n<li>Greater item-level granularity can improve consistency between production and price statistics.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Concerns and Issues<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A major concern is that <strong>India\u2019s PPI remains experimental<\/strong>, creating questions about the robustness and continuity of input-price measurement.<\/li>\n\n\n\n<li>Mapping intermediate inputs, especially imported inputs and services to domestic PPIs also remains difficult.<\/li>\n\n\n\n<li>Consequently, changes in real manufacturing GVA require careful interpretation and comparison with other indicators such as IIP.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Way Forward<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India needs to <strong>institutionalise a comprehensive PPI<\/strong>, improve item-level price collection, strengthen ASI and administrative datasets, improve coverage of imported inputs and services, and ensure transparent documentation and periodic validation of deflators.<\/li>\n<\/ul>\n\n\n\n<p><a href=\"https:\/\/www.business-standard.com\/economy\/news\/mospi-explains-changes-in-india-s-new-national-accounts-methodology-126092101332_1.html\" target=\"_blank\" rel=\"noopener\">Source: BS<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong> Context <\/strong><\/p>\n<li class=\"ms-5\"> MoSPI released the 8th revised National Accounts Series with 2022-23 as the base year in 2026, introducing methodological changes, notably double deflation in manufacturing GVA. <\/li>\n<p><\/p>\n<p><strong> What are National Accounts? <\/strong><\/p>\n<li class=\"ms-5\"> National Accounts Statistics (NAS) provide a systematic picture of an economy\u2019s production, income and expenditure.\u00a0 <\/li>\n<li class=\"ms-5\"> They measure aggregates such as GDP, GVA, consumption, investment, saving and external trade, following the framework of the UN System of National Accounts (SNA). <\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/22-09-2026\/national-accounts-methodology-india\" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-85294","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/85294","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=85294"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/85294\/revisions"}],"predecessor-version":[{"id":85297,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/85294\/revisions\/85297"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=85294"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=85294"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=85294"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}