A base year is a reference year used for comparative analysis in economic studies. It serves as a benchmark for measuring changes in economic indicators, such as price levels (CPI) and industrial production (IIP). The base year provides a stable reference point to gauge economic performance over time.
Why is the government changing the base year for CPI and IIP to 2022-23?
The government is changing the base year to 2022-23 because it was the first ‘normal year’ post-pandemic, with many economic indicators returning to pre-Covid levels. This provides a more accurate reflection of current economic conditions.
What is the significance of choosing 2022-23 as the base year?
Choosing 2022-23 as the base year ensures that the CPI and IIP reflect the economic recovery and growth post-pandemic. It aligns the indices with the most recent and stable economic environment.
How does the base year affect the CPI and IIP?
The base year serves as a benchmark for measuring changes in price levels (CPI) and industrial production (IIP). Updating the base year ensures that these indices accurately represent the current economic scenario.
What economic indicators support 2022-23 as the base year?
• GST Revenue: Significant increase due to economic recovery and systemic improvements. • Private Consumption: Recovered strongly, reaching 58.4% of GDP in the second quarter of FY23. • Industrial Production: Robust performance, especially in sectors like steel and pharmaceuticals. • FDI Inflows: Increased significantly, indicating strong investor confidence. • Social Sector Spending: Government spending on health and social services increased substantially.
When will the new base year be implemented?
The new base year of 2022-23 will be implemented within two years, by FY27.
How will this change impact economic analysis and policy-making?
Updating the base year to 2022-23 will provide more relevant and accurate data, aiding in better economic analysis and policy-making. It will help in tracking inflation and industrial growth more effectively, leading to informed decision-making.
What steps are required for this change?
The Advisory Committee on National Accounts will be reconstituted to consider any methodological changes for both CPI and IIP along with the base year revision. This committee will include representatives from government departments, statistical agencies, academia, and industry experts.
SRIRAM’s
Share:
Get a call back
Fill the below form to get free counselling for UPSC Civil Services exam preparation
