The government is considering changing the base year for significant economic indices to FY23 and revising some datasets to represent structural changes in the economy better and effectively.

Metrics such as the Index of Industrial Production (IIP), National Income, and Wholesale Price Index (WPI) are currently benchmarked against FY12; the previous base year was FY05. In addition, the Consumer Price Index (CPI), a popular benchmark for prices, was established in 2012.

Discussions are going on. A final decision may be taken after the election. 

The report also stated that among other things, the government will soon form a commission to advise modifications to the way national accounts are compiled.

When evaluating the relative performance of indicators across time and analysing changes in economic variables, the base year is used as a point of reference. For instance, FY12 prices are now used to compute real GDP growth.

Periodic revisions to the base year are necessary to keep indices current with changes in the economic composition, such as shifts in sector weights, shifts in consumer trends, or the introduction of new industries.

A methodological change and improved coverage of financial corporations, municipal governments, and autonomous organisations were included in the most recent adjustment to the GDP computation base year, which was made from FY05 to FY12.

Comparatively, moving the WPI and CPI base years to FY12 and 2012, respectively, led to a significant increase in the product basket and an adjustment of the item weights to suit current consumption trends.

The consensus among experts was that changes of this nature needed to be made to the GDP estimate at least once every ten years. Since there had been no significant droughts or structural shocks to the country’s economy during that time, they said, FY23 may be chosen as the base year for data adjustment.