Why in News? 

• The Government of India is set to update the base year for calculating Gross Domestic Product (GDP) from 2011-12 to 2022-23, aiming to provide a more accurate representation of the country's economic structure 

What is Base Year? 

• The base year is a reference point used for GDP calculation to compare economic growth over time by adjusting for inflation. 

Why Revise the Base Year? 

1. Incorporating New Data Sources: Improved availability of quality data due to digitization and sectoral developments since 2011-12. 
2. Accommodating Structural Changes: Reflects shifts in consumption patterns, sectoral contributions, and the inclusion of emerging sectors over the past decade. 
3. Previous Base Year Outdated: The 2011-12 base year, introduced in January 2015, no longer aligns with current economic realities. 
4. Other Reasons: Accounts for post-pandemic economic changes also aligns with international standards for global comparability. 

Implications 

• May lead to revised growth estimates. 
• Provides a more accurate picture of economic activity, aiding in policy decisions and boosting investor confidence.