GDP debate: Centre rebuffs criticism of methods, says 7.8% growth correct

With questions being raised about the higher-than-expected GDP growth rate of 7.8% in the April-June quarter, the statistics ministry on Wednesday issued a six-point rebuttal to the questions being raised about the numbers, asserting that its methods and the numbers released on Monday were correct.

Saurabh Garg, Secretary in the Ministry of Statistics and Programme Implementation (MoSPI), added that he expects a “more informed debate” to happen once the new methods used to calculate India’s GDP are understood.

On Monday, MoSPI data showed India’s GDP grew 7.8% in April-June, much faster than what most economists expected and significantly higher than the Reserve Bank of India’s forecast of 7%. Revisions were also made to past data, including to the growth rate for January-March, which was raised from 7.8% to 8.6%.

These revisions were caused by the use of the new Producer Price Index (PPI) series, the updated Index of Industrial Production (IIP) data series, and the Banking Services Price Index released earlier this year.

Speaking to reporters on Wednesday, MoSPI Secretary Saurabh Garg said the double deflation practice is “new for everyone”.

“So, the lack of familiarity was there all round, whether it is within the statistical community or the economist community. But I am sure as people get used to the double deflation methodology, as they understand it better, there will be a more informed debate,” Garg said.

Prior to the new GDP series, which has 2022-23 as the base year, that was released earlier this year in February, one of the biggest criticisms of Indian data was MoSPI used double deflation only for agriculture and mining and quarrying sectors. For the others, input and output values were ‘deflated’ by the same number, with the Wholesale Price Index and Consumer Price Index being used. This can be problematic when input and output prices change at different rates.

With the new GDP series using the double-deflation method for all sectors, there have been revisions to past estimates of GDP and growth. These revisions have also been accentuated by the use of the new Producer Price Index numbers for inputs and outputs, which is used internationally. According to MoSPI’s Garg, the PPI has more than 300 deflators for different parts of the GDP to compute real values from nominal ones, up from around 180 under the old series. This makes the new series’ estimates more accurate.

Without naming Subhash Chandra Garg, MoSPI released ‘additional information’ on the GDP data, specifically refuting the former bureaucrat’s claim that growth was much lower than 7.8% in April-June.

It argued that the downward revision in the April-June 2025 nominal GDP from Rs 86.05 lakh crore in the old series to Rs 80.00 lakh crore in the new series was the result of “successive revisions to the GDP series arising from the change in base year, incorporation of improved data sources and methodologies, and updation of available indicators”. As such, it is “incorrect to interpret the difference as a deliberate downward revision of last year’s GDP to mechanically increase the current year’s growth rate”. It added that one cannot compare GDP numbers from different series to arrive at the growth rate, as Garg had done.

Changing the base year of economic indicators and improving the methods of calculating them is an international practice that is performed regularly, with India usually doing it every five years or so. Apart from GDP, the Consumer Price Index and Index of Industrial Production data series have also been updated this year. New indicators such as the PPI have also been released to better capture India’s economic performance.

“If you look at the first quarter numbers and the data points we have used, they are all in the public domain…. The kind of growth rate we have seen in certain service sectors is up to 24%,” MoSPI Secretary Garg said, also taking note of the rapid growth seen in manufacturing.

When asked about the revisions made to previous GDP numbers, MoSPI’s Garg said there was no “secular trend that it's only increasing – some quarters it's decreasing, some quarters it's increasing”. As a result, the annual numbers have only been revised upwards slightly by 10 basis points each to 7.3%, 7.2%, and 7.8% for 2023-24, 2024-25, and 2025-26, respectively.

This, Garg said, shows “the numbers are broadly resolute and robust”.

Quizzed on the magnitude of revisions that could be made to the 7.8% growth rate estimated for the first three months of 2026-27, Garg said he didn’t want to commit to anything, although substantial changes are not expected.

“But quarterly numbers are based on hundreds of indicators while the annual numbers are based on actual data. Given the fact that we have more real-time data available now than 5-10 years back, we would expect changes to be lesser. But I don't want to speculate on what exactly would be the nature of those changes,” he said.

Quarterly GDP estimates are compiled using what is called a ‘benchmark-indicator approach’. In this method, movement in quarterly GDP estimates is guided by the movement of hundreds of high-frequency indicators, such as growth in crop production, cement production index, finished steel consumption, and commercial vehicle sales. Annual GDP estimates are based on actual output and numbers.

Former finance secretary Garg’s comments on social media, his column on the same on a website, and interview to a television channel have been cited by critics of the government to question the GDP numbers. Economist and former Chief Economic Advisor Kaushik Basu said on social media platform X that 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”.