Qrius
  • Business
    • Banking
    • Finance
    • Investment Guide
    • Policy
    • SMEs
    • Net Worth
    • Startup
    • Pros and Cons
  • World
    • Entertainment
    • Climate
    • Culture
    • Economy
    • History
    • Politics
    • Elections
    • Sports
      • Scrabble
    • Health
    • Lifestyle
  • Science & Technology
    • Archaeology
    • Nature
    • Space
    • Tech
    • AI
    • Fintech
    • Futuristic Technologies
    • IOT
  • India
    • Culture
    • Economy
    • History
    • Politics
    • Sports
    • Entertainment
    • Climate
    • Health
    • Lifestyle
  • Contributors
    • Digital Marketing Guest Post
    • Education Guest Post
    • Travel Guest Post
    • Fashion Guest Post
    • Fintech Guest Post
    • Health Guest Post
    • IOT Guest Post
    • Politics Guest Post
    • Sports Guest Post
    • AI Guest Post
    • Technology Guest Post
    • Literature Guest Post
  • Content Services
  • Business
    • Banking
    • Finance
    • Investment Guide
    • Policy
    • SMEs
    • Net Worth
    • Startup
    • Pros and Cons
  • World
    • Entertainment
    • Climate
    • Culture
    • Economy
    • History
    • Politics
    • Elections
    • Sports
      • Scrabble
    • Health
    • Lifestyle
  • Science & Technology
    • Archaeology
    • Nature
    • Space
    • Tech
    • AI
    • Fintech
    • Futuristic Technologies
    • IOT
  • India
    • Culture
    • Economy
    • History
    • Politics
    • Sports
    • Entertainment
    • Climate
    • Health
    • Lifestyle
  • Contributors
    • Digital Marketing Guest Post
    • Education Guest Post
    • Travel Guest Post
    • Fashion Guest Post
    • Fintech Guest Post
    • Health Guest Post
    • IOT Guest Post
    • Politics Guest Post
    • Sports Guest Post
    • AI Guest Post
    • Technology Guest Post
    • Literature Guest Post
  • Content Services
02 Mar, 18
02 Mar, 18

The number game: Government to change the base year

The Indian government deviates from the logical approach by changing the base year to 2017-18, instead of 2018-19.

By Qrius

By Sravya Vemuri

A base year is the first of a series of years in an economic or financial index, which is periodically introduced to keep the data current in a particular index. On 15 February 2018, the government said that it would change the base year to 2017-18 so as to reflect the changes in the economy. However, critics feel that this move is more a part of electoral politics and less of an economic one.

The need for a base year

A base year is a particular year used for a comparison of the levels of a particular economic indicator. An arbitrary level of 100 is selected so that percentage changes, either increasing or decreasing, can be easily depicted. On an average, after every 10 years, there is a minimum change of a four percent rise in the price of goods and therefore, the base year needs to be changed. The International Monetary Fund (IMF) also recommends the inclusion of the base year concept while calculating the national income of an economy. Also, changes in the ways of data compilation, new classification systems and new sources of data need to be factored in.

Incorporating new data sets results in the correction Gross Domestic Product (GDP) levels, which affect a wide range of indicators such as trends in public expenditure, taxes and public sector debt. However, annual growth rates are not impacted significantly. This is because the increase in the size of an economy takes place for all following and preceding years. The change from five percent to 6.9 percent may appear large but these two numbers are with reference to different base years and are pegged at different sets of data.

Base year revision in India

The first national income estimates published in 1956 took Fiscal Year (FY) 1949 as the base year. Since then, there have been seven changes, including the latest one, in which the base year of national accounts was changed from FY 2005 to FY 2012.  The government now wants to change it to 2017-18. The Ministry of Statistics and Programme Implementation has proposed to initiate the steps to revise the base years of Gross Domestic Product (GDP), Index of Industrial Production (IIP) and Consumer Price Index (CPI) to accommodate and factor the changes that take place in the economic scenario of the country.

However, analysts have questioned the move of the government, primarily because Demonetisation and the Good and Services Tax (GST) regime have disrupted the economic growth of the country in the year 2017-18. Therefore, ideally, 2018-19 should be taken as the base year. The convention of changing the base year every five years was breached in 2010 when the base year was not revised as it was a drought year.

A political agenda or economic progress?

Selecting 2017-18 as the base year might increase the GDP figures dramatically. This would cast a good impression of the Indian economy on the global landscape but, in the long run, it will affect the economic growth. Plans will be made to accommodate the needs of a rising economy and that would exacerbate the development levels. The government, in recent months, has started to compile the data for the informal sector and employment more accurately.

Also, with GST coming into effect, a new set of data is needed and the government argues that it can be better illustrated when the base year is changed to 2017-18. This might also have a political agenda, as the Lok Sabha elections are approaching. The best way forward is to take the decisions, bearing in mind the long-term impacts of the same.


Featured Image Source: CSIS: Center for Strategic & International Studies on Visual Hunt / CC BY-NC-SA


Stay updated with all the insights.
Navigate news, 1 email day.
Subscribe to Qrius

About Author

Qrius

what is qrius

Qrius reduces complexity. We explain the most important issues of our time, answering the question: "What does this mean for me?"


Featured articles

1

Before Christ

What Does BCE Mean? Difference between BCE, CE, BC and AD
2

GDP

Revealing the Top 10 GDP Countries of 2024: A Deep Dive into Global Economic Powerhouses
3

Android

The Ultimate Guide to the Best Car Racing Games for Android in 2024
4

cars

Best Family Car in India in 2024: Experience Memorable Journeys with Loved Ones
5

Extreme sports

Hidden Chess Rules: Elevate Your Game with Secret Strategies
6

adventure sports

Cristiano Ronaldo vs Lionel Messi: Why Cristiano Ronaldo Is Better
7

40 Top GK Questions: Boost Your Knowledge Quotient!
8

Why has increased productivity not led to more free time?
9

gita

Gita quotes on karma: Want to live your best life? Laws to live by…
10

Facebook

Facebook and Instagram down: What reason did Meta give?

About Qrius

  • About Us
  • Content Services
  • Contributors
  • Become a Contributor
  • Contact

Contribute

  • Digital Marketing Guest Post
  • Education Guest Post
  • Travel Guest Post
  • Fashion Guest Post
  • Fintech Guest Post
  • Health Guest Post
  • IOT Guest Post
  • Literature Guest Post
  • Politics Guest Post
  • Sports Guest Post
  • Technology Guest Post
  • AI Guest Post

Quick Links

  • World
  • Entertainment
  • Climate
  • Culture
  • Economy
  • History
  • Politics
  • Elections
  • Sports
  • Health
  • Lifestyle
  • Science & Tech
  • Archaeology
  • Nature
  • Space
  • Tech
  • AI
  • Fintech
  • Futuristic Technologies
  • IoT
  • India
  • Culture
  • Economy
  • History
  • Politics
  • Sports
  • Entertainment
  • Climate
  • Health
  • Lifestyle
2018 QRIUS. All Rights Reserved