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Government Defends India’s 7.8% Q1 Growth Amid GDP Debate
India’s government says the economy grew 7.8% during April-June.
Some economists and opposition politicians think the number may look unusually high because the way GDP is calculated changed.
The government changed the GDP base year and used newer data sources.
This also changed the reported size of the economy in the same quarter last year.
The government says numbers from the old and new systems should not be compared directly.
It explains that manufacturing can show higher real growth when input costs rise faster than selling prices.
It also says GDP inflation can differ from consumer or wholesale inflation because it covers many parts of the economy.
Critics still want more clarity about the revisions and the methods used.
India reported 7.8% real GDP growth in April-June Q1 FY27, above the Reserve Bank of India’s 7% forecast and economists’ 7.1% median estimate.
The Ministry of Statistics and Programme Implementation defended the figures, saying the new GDP series uses a 2022-23 base year, updated data sources and revised methodologies.
Q1 FY26 nominal GDP was revised from Rs 86.05 lakh crore under the old series to Rs 80 lakh crore under the updated series.
MoSPI said manufacturing’s negative implicit deflator resulted from double deflation, which separately adjusts output prices and intermediate input costs.
Critics, including Subhash Chandra Garg and Congress leaders, questioned the revisions, inflation estimates and whether the methodology overstated economic growth.
- Who
- The Ministry of Statistics and Programme Implementation defended India’s GDP estimates against criticism from economists, former officials and opposition politicians.
- What
- The government defended reported real GDP growth of 7.8% in Q1 FY27 and explained revisions and methodological changes in the new GDP series.
- Where
- The figures concern India’s national economy; the criticism and official response also appeared in social media, political discussions and media interviews.
- When
- The growth data were released on Monday, and MoSPI issued its six-question rebuttal on Wednesday.
- Why
- The dispute arose because the new GDP series revised earlier figures and produced inflation-adjusted growth and sectoral estimates that critics questioned.
Critics’ Concerns
Government’s Defence
Revision of Earlier GDP
Critics’ Concerns
Critics argue that reducing Q1 FY26 current-price GDP from Rs 86.05 lakh crore to Rs 80 lakh crore makes the latest growth rate appear stronger.
Government’s Defence
MoSPI says the figures come from different GDP series and cannot be directly compared; the revision reflects the new base year, improved data sources, methodologies and updated indicators.
Inflation and Real Growth
Critics’ Concerns
Critics question why the implicit GDP inflation rate is lower than consumer and wholesale inflation, and why manufacturing’s real growth exceeds its nominal growth.
Government’s Defence
MoSPI says the GDP deflator covers the entire domestic economy and uses many price deflators, while manufacturing’s negative deflator results from double deflation when input prices rise faster than finished-goods prices.
Credibility of the Estimate
Critics’ Concerns
Subhash Chandra Garg, Jairam Ramesh and Congress critics have described the figures as unreliable or artificially strengthened by methodological changes.
Government’s Defence
The government says the 7.8% figure is supported by indicators including corporate profitability, automobile sales, investment, credit growth and factory utilisation.
Key facts
- Q1 FY27 real GDP growth
- 7.8% in April-June
- Q1 FY27 real GDP
- Rs 81.36 lakh crore, compared with Rs 75.46 lakh crore a year earlier
- Q1 FY27 nominal GDP
- Rs 88.27 lakh crore, up 10.3%
- New GDP base year
- 2022-23, replacing 2011-12
- Q1 FY26 revised nominal GDP
- Rs 80 lakh crore under the latest data, compared with Rs 86.05 lakh crore under the old series
- Manufacturing
- Nominal GVA grew 7.7%, while real GVA grew 9.2%, implying a negative deflator of about 1.5%
- Mining and quarrying
- Real GVA contracted 2.4%, while nominal GVA increased 22.3%
Quotes
Ministry of Statistics and Programme Implementation
India’s government ministry responsible for official statistics and GDP data.
“It is therefore incorrect to interpret the difference as a deliberate downward revision of last year’s GDP to mechanically increase the current year’s growth rate.”
indianexpress.com
“7.8% GDP Growth in Fudged Data, 2.6% in Reality”
indianexpress.com
Kaushik Basu
Economist and former Chief Economic Adviser to the Government of India.
“while he has not studied the numbers in “sufficient depth to take a stance but the best analysis I have heard is that of Subhash Garg, who, as former Finance Secretary, GOI, knows these statistics extremely well””
indianexpress.com
Sources
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