In a significant overhaul of its economic measurement framework, India is set to replace Gross Domestic Product (GDP) with Net Domestic Product (NDP) as its principal gauge of economic activity. This strategic shift aligns with the upcoming United Nations' System of National Accounts (SNA) 2025 guidelines and is targeted for implementation from the fiscal year 2029–30.
What is NDP and Why the Change?
The Ministry of Statistics and Programme Implementation has constituted a dedicated team to oversee this transition. Their mandate includes evaluating the necessary data and methodological adjustments under the new global framework. Unlike GDP, which measures the total value of goods and services produced, NDP provides a more nuanced picture by accounting for the depreciation of man-made assets like machinery and infrastructure, as well as the depletion of natural resources.
This adjustment offers a clearer understanding of the actual cost of production and the economy's sustainable income. While India currently publishes annual NDP estimates, quarterly NDP data is not yet released. Officials assert that this move will render economic measurement more comprehensive and realistic, reflecting the true wear and tear on the nation's capital stock.
Parallel Updates to GDP Calculation
In a separate but concurrent development, India is also updating its GDP calculation methodology by changing the base year to 2022–23 from the existing 2011–12. The revised GDP series, following the SNA 2008 framework, is scheduled for release on February 27. This update will incorporate newer data sources and economic structures, providing a more current snapshot of growth.
Impact on Central Bank Accounting
The new SNA 2025 accounting system will also alter the treatment of the Reserve Bank of India's (RBI) activities. The central bank's output will be reclassified as a non-market activity. Furthermore, payments made by commercial banks for regulatory services will be treated as transfers to the government, not as fees for services. Officials have clarified that these changes will not affect the calculation of national savings or net worth.
Context of a Strong Economy
This foundational change in economic measurement comes at a time when India's economy is demonstrating robust performance. Recent data shows GDP growth accelerating to 8.2% in the second quarter of the 2025-26 fiscal year, marking the fastest pace in six quarters. For the full fiscal year 2024-25, both GDP and NDP registered a growth of 6.5% compared to the previous year.
The transition to NDP signifies India's commitment to adopting globally harmonized and more sustainable metrics of economic progress, moving beyond mere output figures to grasp the net gains available for consumption and investment after maintaining the nation's productive capacity.
