The Ministry of Statistics and Programme Implementation (MoSPI) Secretary Saurabh Garg, described the Budget FY27 as “robust enough.” He told FE that revising the base year for key economic indicators, such as gross domestic product (GDP) and consumer price index (CPI), is unlikely to significantly impact overall budget projections.
Sequencing Debate
When asked if the revision exercise should have occurred before the Budget presentation, Garg explained that revising the base year is a lengthy and complex process, which the government has been working on for over two years. “There is a pre-set, fixed calendar for releasing GDP estimates, which has been announced earlier. Because of the length and complexity of the process, the release date was already decided well in advance,” Garg said.
The Budget for FY27 was presented on February 1. The new GDP series with 2022-23 as the base year is scheduled for release on February 27. On the same date, MoSPI will release the second advance estimates for FY26, along with Q3 FY26 GDP estimates and the first revised estimates of GDP for FY25.
Garg acknowledged that base year revisions will have some impact on budget projections. “Base-year revisions typically affect numbers only marginally. We cannot quantify the exact impact right now. The budget has been prepared on a robust basis, so any changes are unlikely to significantly alter the overall fiscal framework or projections,” he said.
According to the First Advance Estimates released by MoSPI on January 7, real GDP is estimated to grow at 7.4% in FY26 (2025-26), while nominal GDP growth is estimated at 8%.
The Union Budget for FY27 was framed using the existing 2011-12 base year for GDP and 2012 base year for CPI. As a result, key fiscal ratios, such as deficit and debt levels, may not be directly comparable to future figures recalculated under the new framework. GDP estimates heavily influence forecasts for revenue collections, fiscal deficit as a percentage of GDP, debt-to-GDP ratios, and other headline metrics. Inflation assumptions, tied to CPI, guide spending plans, including subsidies and assessments of real incomes.
Statistical Modernization
MoSPI revised the CPI base year to 2024 using data from the 2023-24 Household Consumption Expenditure Survey and released the first headline print under the new series on February 12. Headline inflation under the new base stood at 2.75% for January (year-on-year), with food inflation at 2.13%.
Economists have raised concerns over the sequencing of these changes, noting that base year revisions typically occur before major fiscal exercises like the Budget to ensure projections align with the most current benchmarks.
The previous major GDP base year shift occurred in January 2015, moving from 2004-05 to 2011-12, which resulted in notable upward revisions to historical growth rates for multiple prior years.