The revised series of key economic indicators – GDP, IIP and CPI— are slated to be unveiled in 2026. The exercise is expected to make India’s economic data more robust. Saurabh Garg, secretary, ministry of statistics and programme implementation, speaks to Kuldeep Sigh about the key features of the new data series. He also allays concerns expressed by some quarters about “volatility” of data and strongly refutes notions of “waning credibility” of the country’s statistical system.
Q: Why did it take so long to revise the base years of key economic indicators?
It was essentially due to the Covid-19 pandemic that we couldn’t undertake the revisions. Because of Covid, there was disruption (in the economy), and the consumption patterns have changed. We waited for the disruptions to ease.
Q What are the salient features of the revised GDP series (with 2022-23 as the base year)?
For the new series of GDP, the ministry is exploring use of single extrapolation or double deflation, wherever feasible, for arriving at constant price estimates. Use of deflators at a more disaggregated level, utilisation of the Public Finance management System (PFMS) data, and updated rates and ratios from “type studies” for fisheries, fodder, “milk and products,” construction and road transport are among the key changes. We are also exploring use of Goods and Services Tax data for regional allocation, validating the MCA frame (corporate database), and use of results of latest annual surveys of National Statistics Office (NSO) like Household Consumption Expenditure Survey (HCES), Annual Survey of Unincorporated Sector Enterprises (ASUSE), Periodic Labour Force Survey (PLFS) etc.
Change in composition of CPI?
Q: How will the composition of the CPI basket change in the new series (base year 2024) ?
There are around 407 items about which information on quantity and/or value of consumption by households was collected through field-survey in HCES 2023-24 by NSO. Item basket and weighing diagram of the CPI for the new base is being derived using the data of HCES 2023-24. The number of items is expected to increase in the CPI basket in comparison to the existing series.
Q: What all do the HCES 2023-24 reveal about consumption patterns in rural and urban areas? How will this be reflected in the new CPI basket?
Broadly, total expenses on food have reduced, and within “food,” the spending on cereals has reduced significantly. Spending on fruits, vegetables, and dairy products has increased and so too is the spending on fish and other such items. There’s been a slight increase in expenditures on processed foods also. Greater expenditures on travel and convenience services have been noticed. All these are clearly a reflection of an increasing seriocomic status and greater mobility of people.
Q: Covid and demonetisation are believed to have hit the MSME sector micro units. There are concerns that resorting to extrapolation methods to gauge the unorganised sector activities might have led to inflated figures of gross value added (GVA).
Agriculture sector has a high contribution from the unorganised sector. For agriculture, MoSPI uses the crop production and price data from the Ministry of Agriculture and Farmers’ Welfare and the state governments. No extrapolation method is used here in agriculture. For some of the other industries, in the unorganised sector, the extrapolation method is used. In the new base year, MoSPI is exploring the data from ASUSE which has been conducted annually for the past 3 years.
Unpacking high volatility of IIP
Q: What do you attribute the “high volatility” of IIP to?
There is a standard method to calculate the indices; and there are “base” and “production” effects which combine in these indices. So, anyone can look at the data and find out where and how there is some volatility, if at all. There’s some amount of seasonality involved in many of these indices, which will obviously get reflected. But apart from that, there is no special volatility, which is a matter of concern.
Q Certain incompatibility between the GDP and several high frequency indicators has been noticed. Some circles say this raises questions of credibility…
The data that we produce in the National Statistical system in India is perhaps the most robust and credible. Whether it’s private consumption or government consumption or investment, more than 300 indicators and across different sectors of the economy are being used. We are very transparent with the data. Whatever data we use is provided by different agencies and industry associations. Given the large number of data sources, I think any kind of speculation about credibility of the data is unwarranted.
Q The MoSPI has announced a Survey of Migration, to be conducted next year? How will it be different from previous surveys and how will it capture the impact of reverse migration?
The migration surveys we’ve been doing regularly, the last one was conducted in 2021 (with Periodical Labour Force Survey). A technical export group will be set up for the new survey, and it will look at the inputs received from experts. In every survey, we review the questionnaire and objectives, and receive feedback. The technical group advises us what all needs to be included (in the new survey). We already have a standing technical advisory group. We normally add new members to it.
Q: What are the expected changes in the new IIP series?
We will have a more granular index. Electricity Index by source of generation (renewable, conventional), and enhancement of the coverage of IIP by including gas supply and minor minerals are some of the new features. Disaggregation of mining index into fuel, metalic, non-metallic, minor categories will be attempted. The new series will also introduce the provision for substitution of factories which are closed or have stopped production. The new basket will include “not elsewhere classified (n.e.c.) items” which was not covered in the current series.
Q: There has been an attempt to adopt COICOP 2018 (The United Nations’ Classification of Individual Consumption According to Purpose) for household expenditure. Does that mean “core inflation” will be formally computed in the new series?
We bring out a CPI series in line with the broadly accepted norms. Core inflation is not the mandate of the ministry. Usually, the central banks or other agencies do it (configure core CPI). We will stick to this practice, but will bring out sectoral indices as at present. It may be noted that the definition of core CPI would vary from country to country.
Q What is the intended frequency of base year revisions to be undertaken by MoSPI? Do you plan to ensure a 5-year revision schedule?
HCES serves as the foundation for updating the CPI base. The base updation of the CPI relies on HCES for the item basket and their respective weights. Therefore, the MoSPI is planning to conduct HCES in about every 3 years. Accordingly, base revision of CPI will be done. As per International Recommendations for the Index of Industrial Production 2010, the base year of the IIP should be revised at least once every five years. Nonetheless the base year will be revised every five years in normal circumstances.
Q: Can we expect revision of CPI base year every three years?
The expectation is to do it more frequently. So, 3 to 5 years would be the range.
Q There was talk of the ministry accessing GST data in far greater detail…
We are in touch with the concerned departments to access aggregate GST data for statistical purposes and in this regard, progress is being made.
Q What are the new databases being tapped by the MoSPI?
In GDP calculation, in addition to the use of data from Office of Controller General of Accounts (CGA), MCA-21, RBI, etc. as was done in the previous base revision exercise, use of GST data, E-Vahan portal, UPI transaction data from NPCI, etc. is being explored by the NSO. In view of growing use of e-commerce platforms, corroborated by the HCES findings, MoSPI has already started price collection from e-commerce websites in the 12 towns (with more than 25 lakh population) by creating an additional online market in each of these towns. Efforts are also underway to get the data directly from the e-commerce platforms. Further, MoSPI is also planning to capture airfare and OTT media services using online platforms and Rail fare and petrol, diesel & LPG prices from administrative data sets. MoSPI has tapped the GSTN database for use as a survey frame for conducting Annual Survey of Service Sector Enterprises, which is new in the National Sample Survey ecosystem.