18 hrs ago
Former Adviser Defends India’s 7.8% GDP Growth Methodology
India reported that its economy grew by 7.8% from April to June 2026.
Some people questioned whether the number was trustworthy.
Former economic adviser Krishnamurthy V Subramanian said the number was credible.
He explained that India uses a method called the double deflator.
This method looks separately at price changes for products and the ingredients or materials used to make them.
He compared it to making khichdi with rice and lentils.
Subramanian also said investment was growing strongly.
However, he admitted that the number of formal jobs was not growing as quickly as the economy.
Former Chief Economic Adviser Krishnamurthy V Subramanian defended India’s 7.8% GDP growth for April-June 2026.
He rejected questions about the credibility of the figures and supported the double-deflator methodology.
The method separately adjusts input and output prices to estimate real economic growth.
Subramanian said investment indicators showed momentum, including 12% growth in gross fixed capital formation.
He acknowledged that formal-sector employment creation has not matched the pace of GDP growth.
- Who
- Former Chief Economic Adviser Krishnamurthy V Subramanian.
- What
- He defended India’s reported 7.8% GDP growth and the methodology used to calculate it.
- Where
- The article was datelined New Delhi.
- When
- The figures concern the April-June 2026 quarter.
- Why
- Subramanian said the double-deflator method is a cutting-edge approach and cited investment indicators as evidence of economic momentum, while acknowledging weaker formal-sector job creation.
GDP Skeptics
GDP Defenders
Credibility of growth figures
GDP Skeptics
Questions have been raised about whether the reported 7.8% GDP growth accurately reflects economic performance.
GDP Defenders
Subramanian rejected concerns about credibility and defended the methodology used to calculate real growth.
Investment momentum
GDP Skeptics
Concerns suggest investment indicators may not be keeping pace with the reported GDP growth.
GDP Defenders
Subramanian cited growth in fixed capital formation, private capital expenditure, bank credit and capital-goods output as signs of momentum.
Job creation
GDP Skeptics
The weaker pace of employment creation, especially in the formal sector, raises concerns about how broadly the growth is benefiting workers.
GDP Defenders
Subramanian acknowledged this concern rather than disputing it, while maintaining that other investment indicators were strong.
Key facts
- Reported GDP growth
- 7.8% in the April-June 2026 quarter
- Methodology
- The double deflator separately adjusts input and output prices when calculating real growth.
- Gross fixed capital formation
- Grew 12% in the first quarter, according to Subramanian.
- Listed-company private capital expenditure
- Grew 11%.
- Bank credit
- Expanded by about 20%.
- Capital-goods IIP
- Increased by more than 15%.
- Employment concern
- Formal-sector employment creation was not as high as GDP growth.
Quotes
Krishnamurthy V Subramanian
Former Chief Economic Adviser of India
“So, you know, the double deflator is actually you deflate the output at the price level, change in the price level of the output, and you deflate the input at the price level of the input so that you get, arrive at real quantities, and then you do arithmetic with the real quantities.”
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“That said, though, and I think this is something which we have to acknowledge, that overall, you know, the rate of employment creation, especially in the formal sector, you know, is actually not as high as the GDP growth.”
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Sources
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