How Base-Year Revision Hit India’s GDP, Fiscal Math—Explained

Fresh GDP estimates, released on Friday using a revised methodology and an updated base year of 2022-23, have trimmed the country's nominal output by more than ₹11 trillion.

The revision vindicates longstanding concerns, raised by economists including former chief economic adviser Arvind Subramanian, about the reliability of the earlier 2011-12 series.

The fresh data shows India's nominal GDP for 2025-26 now at ₹345.47 trillion ($3.93 trillion), compared with ₹357.14 trillion under the old methodology — a reduction of 3.26%. A similar downward trend of between 2.9% and 3.8% is apparent across all four years covered by the new data.

The earlier figures were likely inflated because organised-sector data was used to extrapolate output across other parts of the economy, according to an official involved in the calculations who spoke anonymously with Mint. The updated approach draws on GST data, improved deflation techniques, and direct survey findings to better capture informal economic activity.

The budget arithmetic takes an immediate hit. India's Union Budget for FY26 was drawn up assuming a nominal GDP of ₹357.14 trillion. With that figure now lower, the fiscal deficit is expected to widen to 4.51% of GDP from the budgeted 4.36%, unless the government finds an additional ₹51,000 crore in savings. Central government debt, too, would need to fall by ₹6.55 trillion to meet the 56.1% of GDP target set in the Budget.

"In the Union Budget for FY2027, the GoI had pegged the fiscal deficit at 4.3% of GDP for the fiscal, amid reasonable assumptions around revenues and spending. With the revision in the GDP data set owing to the updated base (to 2022-23 from 2011-12), we estimate the nominal GDP to print at ₹380 trillion (+10% YoY), 3.3% lower than the ₹393 trillion assumed in the budget. Accordingly, we estimate the fiscal deficit in FY2027 BE to be closer to 4.46% of GDP," said Aditi Nayar, chief economist at ICRA.

SBICAPS Research puts the FY27 pressure in starker terms. Assuming 10% nominal growth and a similar absolute fiscal deficit of ₹16.95 trillion, the deficit could overshoot its FY27 target by 25 basis points. To hold the line, nominal GDP growth would need to clock 13.7% — a figure SBICAPS describes as "difficult," even accounting for the chief economic adviser's projection of 7–7.4% real growth for FY27. "The consolidation path to FY31 becomes relatively steeper," noted Aditi Nayar, chief economist at ICRA, with the debt-to-GDP ratio pegged 1.9 percentage points higher at 57.5% for FY27.

On the global stage, Mint highlighted that India's ambition of crossing the $4 trillion mark and overtaking Japan to become the world's fourth-largest economy has been set back. Japan's economy stood at an estimated $4.28 trillion in 2025, and at the current exchange rate, India reaches only around $3.93 trillion. The IMF's April update is expected to reflect the revised figures and offer greater clarity on India's trajectory.

The Silver Lining

Yet the revision is not entirely gloomy. Whilst nominal GDP has shrunk, real GDP growth under the new series is actually a touch healthier — clocking 7.6% for FY26, some 20 basis points above the old series' First Advance Estimate. Sharp revisions were also made to prior years: FY24 growth was revised down from 9.2% to 7.2%, whilst FY25 was nudged up from 6.5% to 7.1%, painting a more consistent and credible trajectory.