**Subject:** Economy India's methodology for calculating **Gross Domestic Product (GDP)** underwent significant changes in 2015, marking a shift towards international standards and more comprehensive economic measurement. ## Pre-2015 GDP Calculation Method
- The calculation was based on **factor cost** which primarily focused on income received by factors of production (land, labor, capital, entrepreneurship).
- Used **2004-05 as the base year** for constant price calculations and price deflators.
- Data collection relied heavily on the **Annual Survey of Industries (ASI)** and limited coverage of unorganized sectors.
- The methodology followed the **1993 System of National Accounts (SNA)** guidelines.
- Limited incorporation of **financial intermediation services** and informal sector activities. ## Post-2015 GDP Calculation Method
- Shifted to **market prices** instead of factor cost, including indirect taxes and subsidies in the calculation.
- Updated to **2011-12 as the base year** to better reflect structural changes in the economy.
- Adopted the **2008 UN System of National Accounts (SNA)** guidelines for international compatibility.
- Introduced **MCA21 database** for better corporate sector coverage.
- Enhanced coverage of the **financial sector** and **unorganized enterprises**. ## Key Improvements in New Methodology
- **Broader Data Sources**: - Incorporation of data from **Ministry of Corporate Affairs**. - Usage of **private corporate sector** data through statutory filings.
- **Better Coverage**: - Inclusion of **financial intermediation services** in service sector calculations. - Enhanced representation of the **informal sector** through surveys.
- **Quality Improvements**: - Advanced techniques for measuring **value addition** in various sectors. - Better estimation of **government services** and **non-profit institutions**. The transition to the new methodology has aligned India with global best practices, providing a more accurate picture of economic activity. The adoption of **market prices** and updated base year has made GDP calculations more reflective of current economic realities, though challenges remain in capturing the entire informal sector effectively.