Government is developing a high-frequency index to track India’s informal economy, helping improve GDP estimates, policymaking, inflation monitoring, and investment decisions.
Key Highlights:
- MoSPI plans a high-frequency index for India’s informal economy.
- Index will track the performance of unincorporated enterprises.
- Expected to improve GDP estimation and economic policymaking.
- RBI may use the data for better interest rate and inflation decisions.
- Businesses and investors will gain real-time insights into the informal sector.
- Government aims to launch the index earlier than the official 2031 timeline.
New Delhi, June 29: The Ministry of Statistics and Programme Implementation (MoSPI) is planning to introduce a high-frequency index for India’s unincorporated enterprises, marking a significant step toward improving the country’s economic data ecosystem.
The proposed index will periodically measure the health and performance of India’s vast informal economy, which remains one of the country’s largest sources of employment but currently lacks a dedicated real-time economic indicator.
According to officials, while the official rollout timeline is 2031, the government is working to launch the index much earlier. The initiative aims to bridge a major data gap by providing timely insights into millions of small businesses and informal enterprises operating across the country.
The new index is expected to enhance the accuracy of India’s GDP estimates by offering more frequent data on economic activity outside the organised sector. It could also strengthen inflation monitoring and help policymakers make more informed economic decisions.
The Reserve Bank of India (RBI) may benefit from the additional data while assessing economic conditions and framing monetary policy, including interest rate decisions. Better visibility into the informal economy could improve the central bank’s understanding of demand, employment, and price trends.
For businesses, investors, economists, and financial institutions, the index is expected to provide valuable real-time insights into the performance of India’s largest employment-generating sector, enabling better investment strategies and business planning.
The proposed initiative reflects the government’s broader effort to modernize India’s statistical framework and create a more comprehensive picture of the country’s economic activity, particularly in sectors that have traditionally remained outside regular high-frequency data tracking.
