Change in Base Year to 2011-12

In India, the base year is the year against which the price changes of goods and services are compared to calculate the inflation rate. The base year is changed periodically to reflect the changes in the economy and to make the inflation calculation more accurate. The base year for calculating the inflation rate in India was changed from 2004-05 to 2011-12 in the year 2015.

Reasons for Changing the Base Year

The change in the base year was necessary due to the following reasons:

1. Outdated data: The previous base year of 2004-05 had become outdated, and the data used to calculate the inflation rate was no longer reliable.

2. Changes in the economy: The Indian economy had undergone significant changes since 2004-05, and a new base year was required to reflect these changes.

3. International standards: The United Nations recommended that countries should update their base years at least once every five years to ensure the accuracy of their inflation calculations.

Impact of the Change in Base Year

The change in the base year had the following impacts:

1. Change in Inflation Rate: The change in the base year led to a change in the inflation rate as the new base year had different prices for goods and services.

2. More Accurate Inflation Calculation: The new base year provided more accurate data for calculating the inflation rate, which is essential for formulating monetary and fiscal policies.

Conclusion

In conclusion, the base year for calculating the inflation rate in India was changed from 2004-05 to 2011-12 in the year 2015. The change was necessary due to outdated data, changes in the economy, and international standards. The new base year provided more accurate data for calculating the inflation rate and had an impact on the inflation rate calculation.