The National Statistical Office (NSO) released a new series of Gross Domestic Product (GDP) and Gross Value Added (GVA) with a base year 2022-23 on February 26, 2026, after several methodological improvements. These involved changes in the relative weights of output sectors and demand segments, better coverage by the use of additional and more disaggregated data, including GST data, and by better methods of scaling up economic activities of the informal sector and companies that are not covered by the MCA database. These changes would improve India’s rating of the NSO data from category ‘C’ to a better category in terms of the International Monetary Fund (IMF) framework of assessing the reliability of a country’s national income statistics.
Levels and growth of GDP and GVA in the new GDP series has generally uplifted magnitudes of national income aggregates at constant prices and reduced these at current prices. Accordingly, 2025-26 real GDP growth has been increased to 7.6% (second advance estimates) in the 2022-23 base series, as compared to 7.4% (first advance estimates) in the 2011-12 series. Real GVA growth for 2025-26 stands at 7.7% in the new base series, as compared to 7.3% in the old series. The main reason for this is an increase in the growth of manufacturing to 11.5% in the new series, as compared to 7.0% in the old series in 2025-26. On the basis of current prices, however, nominal growth has been shown to grow at 11.0% in 2023-24, 9.7% in 2024-25, and 8.6% in 2025-26. These may be compared with corresponding growth rates of 12.0%, 9.8% and 8.0% in the respective years as per the old series. Thus, the volatility in the nominal growth series has come down marginally in the new series.
Structural changes due to shift in compositional weights
There are significant structural changes in the composition of output and demand. On the output side, at constant prices, the share of agriculture has gone up and that of manufacturing and transport sector, among others, has gone down. The share of agriculture in total real GVA stands at 17.7% in 2025-26, as compared to 13.8% as per the 2011-12 series. On the other hand, the share of manufacturing has gone down to 16.2% from 17.1% and that of trade, transport to 14.3% from 18.5% , respectively, in 2025-26, among others. The share of manufacturing was falling in the earlier series over the period 2023-24 to 2025-26. It is now shown to be increasing. After agriculture, the biggest gainer in terms of shares is financial services, among others, which has a share of 26.1% in 2025-26.
Its share also shows an increase over the last four years. In terms of demand segments, the share of private final consumption expenditure (PFCE) has become smaller in both real and nominal terms. The FY26 share of nominal PFCE is 56.7%, which is quite close to its share in real terms at 55.7%. The PFCE growth in 2025-26 is higher at 7.7%, as compared to 7.0% under the old base series. The share of gross fixed capital formation (GFCF) in nominal terms is higher under the new base at 31.7% in 2025-26. On the other hand, its share in real terms is lower at 32%, as compared to 33.8% under the old base series.
Impact on fiscal responsibility norms
The nominal GDP series shows lower magnitudes in the 2022-23 series when compared to the 2011-12 series. Thus, the level of nominal GDP in 2025-26 is Rs 345.5 lakh crore, as compared to Rs 357.1 lakh crore as per the old series. This has important implications for the fiscal aggregates. The fiscal deficit in 2025-26 (RE) would now stand at 4.51% of GDP, instead of 4.36% as per the 2011-12 GDP nominal magnitude. The government debt to GDP ratio (as shown in the Statement of Liabilities in the FY27 Budget) in 2025-26 (RE) would also increase to 57.08%, from 55.2% as per the old GDP series. The gross tax buoyancy in 2025-26 (RE) will fall from 0.93 to 0.86 because of higher nominal GDP growth, although the nominal GDP magnitude is lower as compared to the old series.
(The author is chief policy advisor at EY. Tarrung Kapur, senior manager, tax and economic policy group, EY India, also contributed to the article)
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.