The RBI Governor, Sanjay Malhotra, has highlighted the urgent need to revise the base years of key macroeconomic indicators, Consumer Price Index (CPI),
Gross Domestic Product (GDP), and Index of Industrial Production (IIP), to better capture India’s rapidly changing economic structure. Welcoming the Ministry of Statistics and Programme Implementation (MoSPI)’s move to update these base years, the Governor noted that timely revisions are essential for ensuring that macroeconomic data accurately reflects current realities and supports effective policymaking. Updating the CPI base year is particularly important to ensure inflation measurement reflects changing consumption patterns, including shifts in household spending, services usage, and lifestyle changes. Since CPI is central to monetary policy and inflation targeting, a more representative index will help anchor price stability more effectively. The RBI Governor appreciates the MoSPI’s effort to change the base years of major macroeconomic statistical series, CPI, GDP, and IIP, observing that “this exercise transcends the change in the base year and also involves a change in methods, weights, baskets of items, sources, and compilation practices.” These statistical measures are of paramount importance to the RBI in formulating its policies, especially the CPI, which provides the focal point of India’s flexible inflation targeting policy framework. The change in CPI would result in a better representation of the present consumption structure in the country, whereas the revised measure of GDP would account for the evolving economic structure, given the rise in the share of the service sector, digital economy, and the emergence of new business models in the country. The change in the IIP would allow for the correct estimation of the underlying real economic performance in the country. The RBI governor stated in a video that, “I am very happy to note that the Ministry of Statistics and Program Implementation (MOSPI) is revising the base year of key macroeconomic indicators. He further highlighted why India needs new base years for CPI, GDP, and IIP. According to the RBI governor, this exercise is not merely a revision in the base year, but it also covers revisions in methods, weights, item baskets, data sources and competition techniques. Indicators such as CPI, GDP, and IIP play a vital role in policy-making in the RBI. He further added that for us, CPI is especially important for monetary policy purposes because it anchors our flexible inflation targeting framework. Updating the base year of the CPI will ensure that the index reflects the consumption pattern and household expenditures more accurately, as they have obviously changed over a period of time. Similarly, GDP numbers are also very important for us. The GDP needs to capture the evolving structure of the economy, which has again transformed, changed with the rising role of services, digital activities and various new business models. The IIP base revision will also help us in improving our assessments of the underlying momentum in the real economy. Overall, I would like to congratulate the MOSPI; it is a very timely and welcome step. Strengthening our statistical systems, it will facilitate more collaborative policies. It will help us in sustaining price stability and improving economic growth, said the RBI governor.
