In the context of national income accounting, what is the primary function of the GDP deflator?

To adjust nominal GDP to reflect changes in price levels for real GDP

To calculate the total tax revenue generated by the government

To determine the foreign exchange reserves held by the central bank

To measure the total volume of exports and imports

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4 September 2026

Congress critique of GDP revision methodology

The topic concerns the methodology of GDP calculation and national accounts, which is a core technical aspect of economic governance and policy assessment relevant to GS3.

Notes

The Central government has implemented a cumulative downward revision of ₹43 lakh crore in the estimated size of the Indian economy over the past four years.
Concerns have been raised regarding the methodology used to calculate real GDP growth and the deflator used to account for inflation.
The GDP estimates for all four years since 2022-23 have undergone substantial downward revisions.
Analysis indicates that revisions to the base year estimates significantly impact the calculation of nominal growth rates.
Experts have highlighted the need for greater transparency in the methodology underlying national accounts to ensure accurate economic assessment.
The GDP deflator is a critical component in determining real GDP growth, and its sensitivity to inflationary pressures is a point of technical debate.

Part of a longer story

This is day 2 of 2 in Congress criticism of GDP growth figures, which has been running since 3 September 2026. Reading it whole is usually worth more than reading today alone — the exam asks how something developed.

Questions

Explain the significance of the GDP deflator in national income accounting. How do revisions in base year estimates and methodology impact the accuracy of real GDP growth reporting? 150 words

Attempt this — 150 words in 8 min

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Transparency in national income accounting is essential for policy formulation and investor confidence. Discuss the challenges involved in estimating GDP in a developing economy and the importance of methodological rigor in maintaining the credibility of official economic data. 250 words

Attempt this — 250 words in 11 min

0 / 250 words 11:00

Prelims

In the context of national income accounting, what is the primary function of the GDP deflator?

Syllabus

Topics

Sources

250words.in · https://250words.in/daily/2026-09-04/congress-critique-of-gdp-revision-methodology