Just to expand on the two revisions:
Since January 2010, the base year for India’s
statisticians had been the 12 months that ended in March
2005. From now on, it will be the year that ended March
2012. The revised calculation also incorporates more-
comprehensive data on corporate activity and newer surveys of spending by households and informal businesses.
The government also said Friday that its benchmark measure of economic growth will henceforth be based on market prices, not on factor costs. The latter method, which India had previously preferred, tabulates economic activity based on the costs of production, whereas the other method is based on the amounts paid by consumers. Most countries and international bodies calculate GDP based on market prices.
The base year for any country's GDP calculation is normally recalibrated every 5 years or so to adjust for structural differences in an economy - sustained changes in the prices and of goods and services that are not attributed to inflation, which pegging to the CPI of a base year is intended to mitigate. These structural changes in the economy are due to new technology, changes in the production process, changes in social/cultural norms, etc. Anything that affects supply and demand other than price level. So this isn't a big deal.
The more interesting piece of the puzzle is the decision to move from cost-of-inputs based calculation to an expenditure calculation. This is an accounting problem for any economy that is transitioning from a goods-based economy to a services-based economy. In developing economies, a lot of value is produced outside of the market - eg cooking, cleaning, raising children vs. eating at restaurants, hiring cleaners, hiring nannies, daycare, etc. As more of these non-market goods/services move into the realm of the market, they start to count towards GDP under this new expenditure-based GDP calculation. This can lead to overinflated, overoptimistic growth projections.
At the end of the day, most countries calculate GDP using expenditure-based vs. cost-of-production so it means we will be comparing apples to apples when we talk about GDP in the US vs. the UK vs. India. But the real question is: when will we create a better measure of growth than GDP? One that factors in pollution and emissions at the very least is long overdue.