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Informist, Tuesday, Sept. 1, 2026

 

NEW DELHI – The latest quarterly GDP growth estimates incorporated the "most appropriate available price and volume indicator" for the services sector, as the Services Producer Price Indices do not cover the entire sector, the Ministry of Statistics and Programme Implementation said Tuesday. "Depending on the sector, these may include CPI-based indices, sector-specific price indices, unit value indices, output or volume indicators and other relevant administrative or industry-specific data," the ministry said.

 

"Unlike manufacturing and some other goods-producing activities, a comprehensive Services Producer Price Index covering the entire services sector is not currently available. Therefore, National Accounts uses the most appropriate available price/volume indicators for individual service activities," the ministry said in a document responding to queries on updating GDP estimates with the new series of producer price indices and the Index of Industrial Production.

 

India's GDP rose 7.8% on year in the June quarter, with growth seen across all sectors. The services sector rose 10.0% on year, while the manufacturing sector grew 9.2% on year. Nominal GDP growth rose to 10.3% in Apr-Jun from 8.1% a year ago.

 

The RBI has projected the Indian economy to grow 6.7% in the current financial year. The Indian economy had grown 8.6% in the March quarter, and 6.9% in the year-ago quarter.

 

In June, the Department for Promotion of Industry and Internal Trade released three new producer price indices: Output PPI, which tracks the price a factory receives for a product; Input PPI, which tracks the prices businesses pay for raw materials and energy used in production; and Services PPI, which is compiled quarterly. At present, the Services PPI covers only seven sectors.

 

The statistics ministry is using producer price indices in place of the Wholesale Price Index as a proxy deflator. PPIs provide a more appropriate measure of producer prices for relevant components of National Accounts, the ministry said. The UN System of National Accounts also recommends using PPIs.

 

"The use of PPI is expected to improve the measurement of price changes used for deriving volume measures and, consequently, improve the measurement of real GDP and GVA (gross value added)," the ministry said. "However, PPI is not being used universally; the price index appropriate to the nature of each activity is used in the National Accounts."

 

Gross value added, which some economists consider a more reliable indicator of economic activity than GDP, grew 8.2% in the June quarter, up from 7% a year ago.

 

The June quarter estimates incorporate the new PPI and IIP series, both with 2022-23 as the base year. The ministry said it incorporated these indices later in the GDP series because they became available after the release of the new GDP series with FY23 as the base year. The incorporation of these indices has affected both annual and quarterly estimates from FY23 onwards, wherever the relevant price indices or indicators are used.

 

"At the time of release of the new GDP series in February 2026, the latest available price and volume indicators were used for compiling the estimates," the ministry said. The new PPI and IIP series have since become available and have been incorporated to ensure that the GDP estimates use the most appropriate and updated data inputs. The ministry also clarified that this does not amount to introducing a new methodology or changing the GDP series mid-series.

 

Elaborating on the GDP deflator, the ministry said the implicit price deflator does not correspond with other indices as it is derived from the ratio of nominal GDP and real GDP. The implicit price deflator reflects the combined price movements of all goods and services that are included in GDP. "Unlike a specific price index such as CPI or PPI, the implicit price deflator of GDP is not directly computed as an index from collected prices," the ministry said.  End

 

Reported by Shweta

Edited by Saji George Titus

 

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