Govt weighs shift to NDP from GDP as key metric of economy
India is looking at Net Domestic Product as a key economic indicator. This move aligns with United Nations' SNA 2025 guidelines. NDP accounts for asset depreciation and resource depletion, offering a clearer picture of economic costs. The statistics ministry is preparing for this change, with implementation planned for 2029-30. A revised GDP base year is also coming soon.
New Delhi: India is considering a shift toward net domestic product (NDP) as a core measure of economic performance, aligning its national accounts with the United Nations' System of National Accounts (SNA) 2025, government officials said.
The SNA 2025 framework describes NDP as "conceptually superior" to gross measures such as gross domestic product (GDP), arguing that the net indicators better capture the true cost of production by accounting for depreciation of assets and depletion of natural resources.
Globally, including in India, GDP remains the primary headline indicator of economic activity. India currently releases annual NDP estimates alongside GDP but does not publish quarterly NDP data.
NDP is calculated by deducting depreciation of fixed assets and depletion of natural resources from GDP. Depreciation measures the loss in value of capital used in production, while resource depletion captures the decline in physical stock due to extraction and the resulting loss in future economic value.
The statistics ministry is evaluating the data and methodological changes required to implement the SNA 2025 recommendations. A sub-committee has been formed under the Advisory Committee on National Account Statistics to guide the process. Implementation is targeted for 2029-30, in line with guidance from the International Monetary Fund, an official said.
Separately, the ministry of statistics and programme implementation (MoSPI) is revising the GDP base year to 2022-23 from 2011-12, with the new series scheduled for release on February 27. The revision is based on the SNA 2008 framework, which remains in use internationally.
India's GDP growth accelerated to a six-quarter high of 8.2% in the second quarter of FY26. For FY25, both GDP and NDP grew 6.5% from a year earlier.
Some SNA 2025 recommendations will alter the treatment of the central bank in national accounts, and the ongoing base-year revision is compliant with these, officials said. Under the revised framework, central bank output is classified as non-market activity, with payments by banks for regulatory services treated as current transfers rather than service fees. While this boosts value added in the financial sector and affects GDP and NDP levels, it does not change national saving, net lending or net worth.