Explain the difference between computing methodology of India’s Gross Domestic Product (GDP) before the year 2015 and after the year 2015.
Approach · directive: “explain”
What it asks · Explain how the January 2015 revision changed the way India measures GDP: the base year, the headline measure, the treatment of sector value added and the data sources.
The question has 2 parts — answer each
- Explain how GDP was computed before 2015: base year 2004-05, GDP at factor cost, a narrower data base
- Explain the post-2015 method (2011-12 base): GDP at market prices, GVA at basic prices, wider coverage, and bring out what the difference meant
Open with · In January 2015 the Central Statistics Office moved India's national accounts to a new base year, 2011-12, and changed what is measured as well as the year of comparison.
Cover
- Base year: 2004-05 was replaced by 2011-12, updating prices, weights and the structure of the economy.
- Headline measure: growth is now measured by GDP at market prices; earlier it was GDP at factor cost, and the change follows international practice.
- Sectoral measure: gross value added (GVA) is now at basic prices (factor cost plus production taxes less production subsidies), not at factor cost.
- Coverage: company accounts filed under MCA21, financial-sector institutions and regulators, and sales-tax and service-tax data widen the data base.
- Effect: growth for 2012-13 and 2013-14 came out higher than under the old series, so the two are not directly comparable; a back series followed.
- Debate: economists have questioned the MCA21 database and the back series, so data quality and transparency remain live issues.
Close with · The new series is broader and closer to international practice, but its data sources and comparability with the old series are still debated.
Add value (verified)
- The Economic Survey 2014-15 records that after the revision, headline growth is measured by GDP at constant market prices and sector value added at basic prices, in place of factor cost. Economic Survey 2014-15, Volume 2, Chapter 1, Box 1.1: Revision of the Base Year of National Accounts from 2004-05 to 2011-12 ↗“Headline growth rate will now be measured by GDP at constant market prices, which will henceforth be referred to as 'GDP', as is the practice internationally. Earlier, growth was measured in terms of growth rate in GDP at factor cost”
Question: UPSC's CS (Main) 2021, GS Paper III — paper ↗. Approach: Minimalist IAS, checked 30 Sept 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer · 213 words (UPSC limit 150) · Minimalist IAS
In January 2015 the Central Statistics Office moved India's national accounts to a 2011-12 base, changing not only the year of comparison but what is measured and from which data.
Before 2015 (2004-05 series)
- Base year 2004-05 set the prices and weights used for comparison.
- Headline growth was GDP at factor cost, which excludes indirect taxes and subsidies.
- Corporate activity was captured from a smaller set of company results and indirect indicators.
After 2015 (2011-12 series)
- Base year 2011-12 updates prices, weights and the economy's structure.
- Headline growth is GDP at constant market prices, as internationally, a shift the Economic Survey 2014-15 records.
- Sector value added is GVA at basic prices: factor cost plus production taxes less production subsidies; GDP equals GVA plus product taxes less product subsidies.
- Wider data base: MCA21 company filings, financial-sector regulators and institutions, and sales-tax and service-tax data.
Effect of the change
- Growth for 2012-13 and 2013-14 came out higher than in the old series; the two are not directly comparable, so a back series followed.
- Economists have questioned the MCA21 database and the back series, keeping data quality and transparency under debate.
The new method is broader and closer to international practice, but its data sources and comparability remain contested, so transparency matters as much as methodology.
Written by Minimalist IAS from facts checked at source (how we verify) — a little fuller than exam length, so every part of the question is covered; in the hall, keep the structure and trim the detail. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.