Explain the difference between computing methodology of India's Gross Domestic Product (GDP) before the…

Question

Explain the difference between computing methodology of India's Gross Domestic Product (GDP) before the year 2015 and after the year 2015.

Ghissu Editorial · Accepted Answer

After 2015 India measured headline growth as GDP at market prices on a 2011-12 base, using MCA21 corporate filings and an enterprise approach instead of factor-cost GDP and an RBI company sample. The change raised 2013-14 growth from 4.7% to 6.9%.

**Introduction**

In January 2015 the Central Statistics Office shifted India's national accounts from base year 2004-05 to 2011-12 and aligned them with the UN System of National Accounts 2008, changing not only the base but what is measured and how.

**Key Differences in Computing Methodology**

SKETCH: comparison | GDP Method Before and After 2015
a: Before 2015
b: After 2015
- Base 2004-05 :: Base 2011-12
- GDP at factor cost :: GDP at market prices
- RBI sample firms :: MCA21 filings
- Establishment approach :: Enterprise approach
- Labour input method :: Effective labour input
- SNA 1993 :: SNA 2008

1. **Headline measure**: GDP at factor cost gave way to GDP at market prices, with sectors measured as gross value added at basic prices.
2. **Corporate data**: An RBI study of about 2,500 companies was replaced by the filed accounts of over 5 lakh companies in the MCA21 database.
3. **Enterprise approach**: Factory-level measurement through the Annual Survey of Industries gave way to firm-level measurement that also captures marketing and head-office value added.
4. **Informal sector**: The effective labour input method weights owners, hired workers and helpers differently, and financial sector coverage widened.

**Consequences and Critiques of the New Series**

1. **Revised growth**: Growth for 2013-14 rose from 4.7% to 6.9% despite weak credit and investment.
2. **Overestimation debate**: Arvind Subramanian argued in 2019 that growth in 2011-12 to 2016-17 was overstated by about 2.5 percentage points a year, which the PM's Economic Advisory Council rebutted.
3. **Data quality**: An NSSO survey found about 38.7% of sampled MCA21 companies out of coverage or untraceable.

**Conclusion**

The 2015 method moved India closer to global practice but left its numbers contested. The 2022-23 base series of February 2026 shows that regular, transparent revision is what keeps national accounts credible for policy and markets.

Explain the difference between computing methodology of India's Gross Domestic Product (GDP) before the year 2015 and after the year 2015.

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