India’s GDP data controversy highlights doubts over new statistical methods

India’s recent GDP figures, amid methodological changes and political debate, raise questions about the accuracy and transparency of economic data amidst fierce technical disagreements and political scrutiny.

India’s statistics ministry has spent much of the week insisting that the country’s reported 7.8% growth rate for the April-June quarter is sound, arguing that the row was triggered by a basic comparability error after India switched its GDP base year to 2022-23. The dispute began after former finance secretary Subhash Chandra Garg said nominal growth was only about 2.6% and suggested real growth was close to zero, but officials say that conclusion was reached by setting a number from the superseded 2011-12 series against one from the new series. (indianexpress.com)

The stakes are larger than an internal quarrel among economists. India’s first-quarter expansion came in above the Reserve Bank of India’s 7% forecast, remained strong enough to keep the country among the fastest-growing major economies, and accelerated from 6.9% a year earlier, even though it cooled from the 8.6% pace recorded in the January-March quarter. At the same time, the argument has found an audience because doubts about jobs and investment have persisted; NDTV reported that former RBI governor Raghuram Rajan had asked whether the figures were truly capturing conditions on the ground. (indiatoday.in)

The government’s case rests on a wider methodological reset than the headline quarrel suggests. The updated quarterly and annual series released on 31 August uses 2022-23 as the base year and folds in a new Output Producer Price Index, a Banking Services Price Index and revised administrative data. Officials say quarterly GDP is built using a benchmark-indicator approach, in which movements are guided by high-frequency measures across sectors, and that growth must therefore be computed using the same rebased series on both sides of the comparison. In the official FAQ, the government said the drop in the earlier quarter’s nominal GDP estimate reflected successive revisions, not a late attempt to flatter the latest number. (pib.gov.in)

Much of the confusion has centred on “double deflation”, a technique the ministry says is now being applied more fully in manufacturing. Saurabh Garg, the statistics secretary, told reporters that the method was “new for everyone”, reflecting how unfamiliar many economists and commentators still are with it. The approach strips out price changes separately for outputs and for inputs, rather than using one broad inflation measure for both. The official FAQ says that is why manufacturing can show a negative implicit deflator even when both selling prices and input costs are rising: if inputs become dearer faster than outputs, nominal value added can grow more slowly than real value added. (indianexpress.com)

Officials have also tried to show that the published figure is supported by evidence outside the national accounts tables. In his NDTV interview, Saurabh Garg said the data sources were open to scrutiny and pointed to GST receipts, listed-company reports and production indicators such as steel, cement and electricity as cross-checks on the official estimate. Speaking separately, he said some services segments had expanded by as much as 24%. He also argued that the broader pattern of revisions did not support allegations of manipulation, noting that annual growth rates for 2023-24, 2024-25 and 2025-26 were each nudged up by only 10 basis points, to 7.3%, 7.2% and 7.8% respectively. (ndtv.com)

Subhash Chandra Garg’s complaint, however, is narrower than a blanket rejection of growth. He has said the 7.8% figure “looks very good” but should be examined more carefully because the current-price comparison base was altered so sharply. As he set it out, Q1 nominal GDP for 2025-26 was first published at Rs 86.05 lakh crore under the old series and is now about Rs 80 lakh crore under the rebased one. He argues that, if last year’s originally published current-price number were used, nominal growth this time would be below 2.5%. In that telling, the issue is not whether rebasing is legitimate, but whether the presentation of the new and old numbers has been clear enough. (indiatoday.in)

The argument quickly spilled out of the technical realm. Reuters reported that Congress seized on Garg’s intervention, with Jairam Ramesh dismissing the figures as “statistical gymnastics”. The Indian Express also noted that Kaushik Basu, a former chief economic adviser, said Garg’s critique was the strongest one he had heard, though without fully endorsing its conclusion. On Business Today TV, the ministry’s rebuttal was framed in plainer terms: comparing the old and new GDP series, Saurabh Garg said, was essentially like comparing apples with oranges. (marketscreener.com)

For now, the official position has not shifted. The ministry says the first-quarter estimate should stand, and officials have signalled that while revisions are always possible as more source data arrive, they do not expect dramatic changes. That leaves India with a statistical controversy that is partly about arithmetic and partly about trust. Rebased data series are meant to measure a changing economy more accurately, but when the transition is poorly understood, even defensible numbers can become politically combustible. (indianexpress.com)