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Context
The International Monetary Fund (IMF) currently rates India’s national accounts data at ‘C’, the second-lowest grade in its four-tier Data Adequacy Assessment (DAA) scale. The IMF assesses the adequacy of official statistics for surveillance of a country’s economy. A ‘C’ rating indicates that data shortcomings somewhat hamper economic surveillance.
Following India’s announcement of a new GDP and CPI series, the IMF is expected to upgrade its rating in early 2026.
Key Highlights:
National Accounts Statistics (NAS): Received a ‘C’ grade.
- Implication: Data is available regularly, but methodological weaknesses hinder cross-country comparability and effective economic surveillance.
Consumer Price Index (CPI): Graded ‘B’, meaning it is broadly adequate but with some shortcomings.
Current Status and IMF Assessment
- India’s DAA rating of ‘C’ has persisted for two consecutive years (2024–25).
- Concerns cited by IMF staff include:
- Outdated base year (2011-12) for GDP
- Single deflation methods introducing cyclical biases
- Gaps between production and expenditure approaches
- Limited coverage of the informal sector
- IMF notes India’s data is broadly adequate, but further improvements would enhance surveillance and policy formulation.
Reasons for ‘C’ Grade – IMF Observations
- Outdated Base Year:
- GDP and CPI still rely on 2011–12 consumption and production structures, not reflecting the modern economy.
- Use of WPI as Deflators:
- Absence of a comprehensive Producer Price Index (PPI) forces reliance on wholesale prices, weakening real GDP estimates.
- Production vs Expenditure Gaps:
- Recurring discrepancies indicate undercoverage of expenditure data and significant informal sector activity.
- Limited Seasonal Adjustment:
- Quarterly GDP lacks robust seasonal adjustments, affecting growth trend analysis.
- Need for Better Statistical Techniques:
- IMF recommends improved modelling practices for national accounts.
India’s National Accounts Statistics (NAS)
Publisher: Ministry of Statistics and Programme Implementation (MoSPI)
Purpose:
- Provides a comprehensive macroeconomic database of India’s economy, including GDP, GVA, consumption, investment, savings, and related aggregates.
Methodology:
- System Followed: UN System of National Accounts (SNA-2008)
- Income Approach (Primary): GDP estimated using incomes of households, enterprises, and government.
- Expenditure Approach (Supplementary): GDP estimated via consumption, investment, government spending, and net exports.
- Sectoral GVA Method: Value added computed across agriculture, industry, services at current and constant (2011–12) prices.
Key Indicators Published:
- GDP & GVA: Sector-wise and aggregate
- Consumption Expenditure: Private and government
- Gross Capital Formation (GCF): Machinery, construction, valuables
- Savings & Investment Rates across sectors
- National Income, Disposable Income, Per-Capita Indicators
Upcoming Revisions in India’s Data
- GDP base year: Updated to 2022-23, first revision since 2015.
- CPI base year: Updated to 2024 to better reflect consumption patterns.
- Methodological improvements:
- Better volume estimates using double deflation techniques with producer price indices
- Inclusion of new data sources and improved statistical methods for quarterly GDP
- Expected launch: February 2026
Other Improvements Highlighted by Indian Officials
- Balance of Payments (BoP):
- Released with a 2-month lag from Q1 FY26
- RBI plans monthly BoP statistics (lag ~40 days, more aggregate level)
- National accounts compilation: Uses data from private corporate and government accounts, improving coverage and granularity
- Suggested regular benchmark revisions for national accounts, prices, and other data sets in line with international best practices
IMF Recommendations for Further Improvements
- Conduct population census to ensure survey representativeness (last in 2011–12)
- Provide timely consolidated government fiscal accounts
- Expand data coverage for NBFCs
- Improve timeliness and granularity of systemic financial linkages
