Data reset: RBI governor backs CPI, GDP and IIP base year revision, says it will sharpen policy signals

Reserve Bank of India Governor Sanjay Malhotra has welcomed the Ministry of Statistics and Programme Implementation’s (MoSPI) decision to revise the base year for key macroeconomic indicators — Consumer Price Index (CPI), Gross Domestic Product (GDP) and Index of Industrial Production (IIP) — saying the exercise will better reflect changing consumption patterns and economic structures and help in more calibrated policymaking.MoSPI has announced a comprehensive base year revision of CPI, GDP and IIP, updating the statistical framework that underpins India’s macroeconomic assessment.Welcoming the move, Malhotra said macroeconomic indicators such as CPI, GDP and IIP play a critical role in policymaking at the RBI, reported PTI. In a video message shared by MoSPI on social media platform X, he said the exercise goes beyond a routine base year change and includes revisions in methods, weights, item baskets, data sources and computation techniques.“For us, CPI is especially important for monetary policy purposes because it anchors our flexible inflation targeting framework,” Malhotra said.He noted that updating the CPI base year would ensure the index more accurately reflects current consumption patterns and household spending, which have changed significantly over time.Malhotra said GDP estimates are equally crucial, as they need to capture the evolving structure of the Indian economy, including the growing role of services, digital activities and new business models.He added that revising the IIP base year would improve assessments of the underlying momentum in the real economy.“It is a very timely and a very welcome step. By strengthening our statistical systems, it will facilitate more calibrated policies,” Malhotra said.The RBI governor said the base year revision would also support the twin objectives of sustaining price stability and improving economic growth.The CPI-based retail inflation data for December, released by MoSPI, was the last under the current 2012 base series. Inflation for January will be computed under a new CPI series with 2024 as the base year.The new CPI series, expected to be released in February, will involve a comprehensive revision of coverage, item basket, weights and methodology. MoSPI is also set to release a new national accounts series next month, followed by a revised IIP series later in the year.