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Base Year
For examining the performance of the economy in real terms, estimates of various macro-economic aggregates are prepared at the prices of selected year known as base year.
The estimates at the prevailing prices of the current year are termed as "at current prices", while those prepared at base year prices are termed as "at constant prices". The comparison of the estimates at constant prices, which means "in real terms", over the years gives the measure of real growth
In India, the base year of national accounts have been revised in the following chronological order:
- From 1948-49 to 1960-61 in August 1967;
- From 1960-61 to 1970-71 in January 1978;
- From 1970-71 to 1980-81 in February 1988;
- From 1980-81 to 1993-94 in February 1999;
- From 1993-94 to 1999-2000 in January 2006;
- From 1999-2000 to 2004-05 in January 2010;
- From 2004-05 to 2011-12 on January 30, 2015
The reason for changing the base year of the national accounts periodically is to take into account the structural changes which have been taking place in the economy and to depict a true picture of the economy through macro aggregates like Gross Domestic Product (GDP), National Income, consumption expenditure of Government and individuals, capital formation etc.