The new series incorporate additional data sources from the Ministry of Corporate Affairs (MCA), which account for various surveys including the National Sample Survey to provide better estimates of output. This is especially important given the relative size of India’s informal (i.e. unregistered) economy. These additional data sources and methodological changes to the statistics have resulted in significant differences compared to the previous system, affecting various growth rates and GDP-dependent ratios. Under the new NAS 2011-2012, India has a higher GDP growth rate of 6.90% at market prices for the fiscal year that ended March 2014, compared to 5.02% under the previous system (NAS 2004-2005). The significant increase in growth is attributable to the inclusion of services-based elements in manufacturing (classified as manufacturing), thus providing a truer reflection of India’s economic structure. Indeed, under NAS 2011-2012, the services sector constitutes a smaller proportion of overall GDP at 50.91% as of the fiscal year that ended March 2014 compared to 57.03% under the previous system. India’s industrial sector, conversely, now takes a larger proportion of GDP reflected across each of the components (manufacturing, mining and construction). Most notably, the manufacturing sector now comprises 17.06% of total GDP compared to 12.89% under the previous system.

The revision in favour of manufacturing has been justified by the nature of India’s economic structure. Higher manufacturing figures have also been attributed to additional data sources (most notably the MCA21 database) used to supplement those from the existing manufacturing companies. On the other hand, India’s transport, storage and communication services, are smaller after the rebasing, totalling INR7.08 trillion for the fiscal year that ended March 2014, compared to INR7.81 trillion under the previous system, NAS 2004-2005, with a similar decline observed in the statistics for the prior year.

However, the new NAS 2011-2012 is not without its critics, notably because of a downward revision of nominal GDP post-rebasing which affects various economic risk ratios. During the fiscal year that ended March 2014, India reported nominal GDP of INR113.45 trillion at market prices compared to INR113.55 trillion under the previous system of national accounts (NAS 2004-2005), despite (and indeed, because of) the availability of new data sources from previously unreported firms. The effect is amplified for prior fiscal years, such as 2012 and 2013 where the differences are larger by as much as 1.97% and 1.23% respectively. Reduced GDP reported during the previous fiscal years may have an upward bias on overall growth. Additionally, it will affect GDP-relative ratios such as those for the current account and government debt, which some critics have suggested were distorted (i.e. larger than reality) due to the previous, poorly-defined computation of GDP. However, even after the changes, the current account-to-GDP and debt-to-GDP ratios should remain broadly unchanged. Indeed these ratios are might just be marginally worse in FY 2011-12, for instance, given that lower nominal GDP barring corresponding revisions to the current account and debt statistics.

At the time of writing, only the annual national accounts are available. When the quarterly series are released mid-February 2015, they will help analysts better decompose the effect of India’s rebasing. The structural changes implied by the rebased GDP (from a services-centric to a more manufacturing-centric economy) merit further analysis. The availability of quarterly statistics may also help shed light on how India’s national accounts statistics correspond to other trends in its services and manufacturing sectors, in addition to its trade and expenditure patterns.