GS Question

The computing methodology of India's Gross Domestic Product (GDP) changed significantly after the year 2015. Prior to 2015, India used the factor cost method for computing GDP, which primarily focused on production within the country's borders and valued goods and services at their basic prices.

However, after 2015, India adopted a new methodology called the market price method. This method takes into account not only the production within the country but also incorporates trade and production abroad. It values goods and services at their market prices, which includes taxes and subsidies.

The new methodology also introduced a more comprehensive approach to capturing economic activities by considering data from various sectors like manufacturing, services, and agriculture. It incorporated additional information through large-scale surveys, including the Annual Survey of Industries and the Economic Census, to capture a wider estimation of economic activity across different sectors.

Furthermore, after 2015, India also shifted its base year for calculating GDP from 2004-05 to 2011-12. This change aimed to reflect the evolving structure and composition of the economy, considering the significant changes in production methods and consumption patterns over time.

The change in methodology and base year allowed for a more accurate estimation of India's GDP and better alignment with international standards and practices. However, these changes also led to some revisions in historical GDP figures, reflecting the improved estimation techniques and data sources.