5 hrs ago
Government Defends Revised GDP Estimates Amid Growth Manipulation Claims
India changed the way it calculates the size and growth of its economy.
It also updated some of the data and used a new base year, 2022-23.
This caused some older GDP numbers to change.
The statistics ministry says this does not mean the government changed the numbers to make growth look bigger.
It reported that the economy grew 7.8% in real terms during the first quarter of fiscal 2026-27.
In manufacturing, the prices of materials used by factories rose faster than the prices of finished products.
That is why manufacturing showed a negative price adjustment even though prices were not necessarily falling.
The ministry also said GDP inflation is different from household inflation because GDP measures prices across the whole economy.
Officials and economists supporting the ministry said such revisions are a normal part of improving economic statistics.
India’s statistics ministry said GDP revisions reflect a new 2022-23 base year, improved data sources and updated methodologies.
Real GDP growth was estimated at 7.8% in the first quarter of fiscal 2026-27, with nominal growth reported at 10.3%.
The ministry said the comparable Q1 FY2025-26 nominal GDP estimate under the new series is ₹80.32 trillion, not the earlier ₹86.05 trillion figure from the old series.
A negative 1.5% manufacturing GVA deflator resulted from input prices rising faster than output prices under the double-deflation method.
The ministry said GDP, consumer and wholesale price measures differ because they cover different goods, services, sectors and price concepts.
- Who
- India’s Ministry of Statistics and Programme Implementation, with comments from State Bank of India economist Soumya Kanti Ghosh and former Finance Commission chairman N.K. Singh.
- What
- The ministry defended revised GDP estimates and explained differences between GDP, consumer and wholesale price measures, as well as sectoral deflators.
- Where
- India.
- When
- The clarification was issued on Wednesday after the release of the updated annual and quarterly GDP series.
- Why
- The ministry said revisions were caused by the new 2022-23 base year, improved data sources, new price indices, additional administrative data and updated estimation methods, not an effort to inflate growth.
Government and Supporters
Critics and Alternative Interpretations
Reason for GDP revisions
Government and Supporters
The ministry, Soumya Kanti Ghosh and N.K. Singh said the changes reflect normal revisions arising from a new base year, improved data, updated indicators and revised methodologies.
Critics and Alternative Interpretations
Critics alleged that reducing the earlier current-price GDP estimate from ₹86.05 trillion to roughly ₹80 trillion could mechanically make current-year growth appear higher.
Comparing old and new GDP figures
Government and Supporters
The ministry said the ₹86.05 trillion estimate came from the superseded 2011-12 series and cannot be directly compared with figures from the 2022-23 series.
Critics and Alternative Interpretations
Those questioning the estimates compared the old Q1 FY2025-26 figure with the latest Q1 FY2026-27 figure and interpreted the difference as a downward revision of the previous year’s GDP.
Interpretation of deflators
Government and Supporters
The ministry said manufacturing’s negative deflator can result when input prices rise faster than output prices, while differences between GDP deflators, CPI and WPI reflect their different coverage and methods.
Critics and Alternative Interpretations
Critics pointed to the unusual negative manufacturing deflator and the gap between price measures as reasons to question how the new estimates capture inflation and real growth.
Key facts
- Real GDP growth
- 7.8% in Q1 FY2026-27.
- Nominal GDP growth
- 10.3% in Q1 FY2026-27, according to the ministry’s clarification.
- New GDP base year
- 2022-23, replacing the 2011-12 base-year series.
- Comparable Q1 FY2025-26 nominal GDP
- ₹80.32 trillion under the new series; later revisions brought it to ₹80.00 trillion after updated indices were incorporated.
- Manufacturing GVA
- Real GVA grew 9.2%, while nominal GVA grew 7.7%, producing a negative 1.5% implicit deflator.
- GDP inflation measure
- The Q1 implied GDP deflator was about 2.5%; the ministry said it is not directly comparable with CPI inflation of 3.9% or WPI inflation of more than 9%.
- New data inputs
- The updated series incorporated a Producer Price Index, Banking Services Price Index, revised Index of Industrial Production data and additional administrative data.
Quotes
Ministry of Statistics and Programme Implementation
India’s government statistics ministry explaining the GDP revisions
“Thus, the movement from ₹86.05 trillion to ₹80.00 trillion is the result of successive revisions to the GDP series arising from the change in the base year, incorporation of improved data sources and methodologies, and updation of available indicators.”
livemint.com
“They do ‘not represent a downward revision made to make the current year’s growth appear higher'. Any such attribution reflects prejudice, bias and a lack of understanding.”
livemint.com
Sources
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