The National Statistics Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI) has released a draft guideline for states and union territories to compile Gross State Domestic Product (GSDP) estimates using the expenditure approach. The new framework, based on the 2022-23 base year, aims to bring uniform methodology and consistency across all states in measuring economic activity through spending patterns rather than production or income methods.
Currently, most states calculate GSDP only from the production or income side. This new guideline introduces a complementary expenditure-based approach that would strengthen state-level economic measurement and align it with national accounting practices.
Key facts
- Draft guideline released by National Statistics Office, Ministry of Statistics and Programme Implementation
- Base year: 2022-23
- Covers expenditure components: Private Final Consumption Expenditure, Government Final Consumption Expenditure, Gross Fixed Capital Formation, Changes in Inventories, Valuables and Net Exports
- Feedback deadline: 28 October 2026
- Available on MoSPI website for public and stakeholder consultation
- Currently, some states compile Government Final Consumption Expenditure and Gross Fixed Capital Formation, but no state compiles Private Final Consumption Expenditure
What the expenditure approach means
GSDP can be measured through three methods: production (output of goods and services), income (earnings from production), and expenditure (total spending). The expenditure method sums all spending in the economy: what households consume, what government spends, what businesses invest in capital, changes in stored goods, and net exports.
This new guideline focuses specifically on the expenditure method, which has not been systematically applied across states until now. It provides detailed instructions on how to collect, estimate and compile each spending component at the state level.
Why states need this framework
States currently have no standardised methodology for measuring GSDP from the expenditure side. This creates inconsistencies across states and makes it difficult to compare economic performance accurately. Some states already compile estimates of government spending and business investment, but none calculate household consumption expenditure at the state level.
Having all three measurement approaches would give a more complete picture of each state’s economy and help verify GSDP figures by showing whether all three methods produce consistent results.
What the guideline covers
The draft document explains the concepts behind each expenditure component, defines what should be included or excluded, identifies data sources available in each state, and lays out calculation procedures and formulas. It prioritises using state-specific data wherever available, but also provides allocation methods and indicators to derive state-wise estimates when direct state-level data do not exist.
For example, private household consumption cannot be directly measured at state level from administrative records, so the guideline recommends using household survey data, retail sales figures, electricity consumption and other proxy indicators to estimate spending patterns in each state.
Strengthening state statistics
This initiative aims to improve the capacity of State Directorates of Economics and Statistics, which are responsible for compiling state economic data. It will standardise practices, reduce methodological variations, and ensure state-level national accounts are consistent with central government approaches.
Having comparable expenditure-based GSDP estimates across all states will support better economic analysis, policy comparison between states, and more rigorous national-level accounting.
What this means for you
Researchers, economists and policy analysts will gain better data for understanding how different states’ economies work and comparing their performance. Government officials and planners can use expenditure data to identify consumption patterns, investment trends and export-import behaviour within each state, helping design more targeted economic policies.
Students studying economics or public policy will benefit from more complete and comparable state economic statistics. Businesses tracking state-level market trends will have access to better consumption data for market analysis.
What happens next
The guideline is open for feedback from stakeholders, including state governments, statistical agencies, academics and researchers until 28 October 2026. The Ministry will incorporate suggestions and release a final version. States will then need to adopt the methodology and begin compiling expenditure-based GSDP estimates in line with this framework.