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Informist, Wednesday, Sept. 2, 2026

 

NEW DELHI – The Ministry of Statistics and Programme Implementation Wednesday clarified the downward revision of GDP in the base year and low deflator in the latest data amid criticism that the Apr-Jun GDP data overstated growth. The ministry said the downward revision of last year's data was due to a change in the base year, incorporation of improved data sources and methodologies, and the updating of available indicators. "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," the ministry said.

 

Monday, the ministry released the quarterly GDP estimates for the June quarter, which showed that the Indian economy grew 7.8% in Apr-Jun, sharply above the consensus estimate of 7.2% and the Reserve Bank of India's forecast of 7.0% for the quarter. Some economists said the downward revision to the year-ago GDP estimate had resulted in an overstatement of GDP growth in Apr-Jun.

 

Former finance secretary Subhash Chandra Garg said the latest GDP data overestimated growth and claimed actual GDP growth in Apr-Jun at current prices was 2.6%, while real growth was close to zero.

 

"Most importantly, the 86.05 lakh crore (INR 86.05 trillion) estimate from the old 2011-12 series cannot be directly compared with the current Q1 2026-27 estimate under the revised 2022-23 series," the ministry said in a release. "The relevant comparison for Q1 2026-27 of Rs 88.27 lakh crore (INR 88.27 trillion) would have been with the earlier Q1 2025-26 estimate of 80.32 lakh crore (INR 80.32 trillion), and not with the old 86.05 lakh crore (INR 86.05 trillion) estimate from the superseded series," the ministry said.

 

The ministry said the quarterly GDP estimates are compiled using the benchmark-indicator approach, under which movements in quarterly estimates are guided by movements in relevant high-frequency indicators. "A revision in the previous-year benchmark does not, by itself, create an artificial increase in the current year's underlying economic activity or the indicators used for estimation."

 

In February, the National Statistics Office introduced the new GDP series with a revised base year. The ministry also incorporated the new series of the Index of Industrial Production and Output Producer Price Index, as well as the Banking Services Price Index, with FY23 as the base year. The government has used PPI in place of the Wholesale Price Index as a deflator because it gives a more appropriate measure of producer prices for relevant components of National Accounts.

 

Economists also said the GDP deflator of 2.5% assumed in the data was too low. At 2.5%, the GDP deflator is much lower than CPI inflation at 3.9% and WPI inflation of around 9.8% in the June quarter.

 

The ministry said the "price divergence is reconciled by understanding that the GDP deflator is an implied price of net value added, not a direct measure of transaction prices." There is "no inconsistency" as the GDP deflator, CPI and WPI measure different aspects of the economy and have different coverage and weights, it added.

 

The implicit GDP deflator is the ratio of GDP at current prices to GDP at constant prices. It covers the entire economy, including government spending, corporate investments, exports, and financial and non-financial services. "Since raw material prices were very high and certain service sector inflation is very low, it diluted the high inflation seen in the consumer or wholesale commodity sectors," the ministry said. "Therefore, the implicit GDP deflator need not move in line with either CPI or WPI."

 

The latest GDP estimates are based on information available at the current stage and are subject to revision as more comprehensive and updated source data become available, the ministry said. The ministry said that as it incorporates additional information, estimates under the different approaches may change. "Consequently, the statistical discrepancy may also change," the ministry said.

 

The direction and magnitude of any revision will depend on the revisions to the underlying production- and expenditure-side estimates, rather than on a mechanical adjustment of the discrepancy alone, the ministry said. "At the time of release of final estimates at current prices, the discrepancies will be very insignificant or zero as was found in case of FY23 and FY24," it added.  End

 

Reported by Shweta

Edited by Saji George Titus

 

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