GDP data revision: Govt says it's revised base, not baseless

New Delhi: The statistics ministry Wednesday defended India's latest GDP estimates amid criticism that the 7.8% growth reported for the April-June quarter looked inflated.

Critics of the better-than-expected growth print have raised two issues. They argued that the reported growth was boosted by a downward revision in GDP for the April-June quarter of FY26. Also, according to them, the data show a low GDP deflator of 2.5% even as retail inflation and wholesale inflation averaged around 3.9% and 9.3%, respectively, in the quarter.

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The deflator is used to convert GDP numbers at current prices to constant prices to allow comparison across years. Official data showed a 10.3% GDP expansion in nominal terms, or current prices, yielding an inflation deflator of about 2.5% if the real GDP growth was 7.8%.

The government countered the arguments. It cited the change in the accounting base year, improved data sources and methodologies, and the significantly broader coverage of items in price calculations to stress that the latest GDP growth figure better reflected the economic activity.

New series

In February this year, India launched a new GDP series with 2022-23 as the base year, updating it from 2011-12. It released updated national accounts data up to fiscal 2025 under the new series.

The ministry now also incorporates the new Output Product Price Index, updated Index of Industrial Production series, Banking Services Price Index and updated information from various administrative sources while working out the estimates.

Due to the revision, the estimated size of India's economy shrank 3.8% in FY25 from estimates under the old series. Growth rates also changed accordingly. For instance, the January-March expansion rate was also revised, with the quarter's real GDP growth now pegged at 8.6% instead of the previously reported 7.8%.

Former finance secretary Subhash Garg argued that April-June FY27 GDP growth would have been 2.6% at current prices if the April-June 2025 nominal GDP figures had not been revised down to ₹80 lakh crore from ₹86 lakh crore. This made April-June 2026 "look better", he said.

The ministry rejected the interpretation saying the ₹86 lakh crore figure was based on the earlier GDP series, which used 2011-12 as the base year. Under the new series, with 2022-23 as the base year, nominal GDP for April-June 2025 was revised to ₹80.44 lakh crore.

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The movement of Q1FY26 GDP figures to ₹80 lakh crore in current prices from ₹86.05 lakh crore was the result of successive revisions arising from the change in the base year, the incorporation of improved data sources and methodologies, and the updating of available indicators, the ministry said. "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."

GDP deflator

The ministry said the 2.5% implied GDP inflation rate does not need to align with Consumer Price Index (CPI) inflation of 3.9% or Wholesale Price Index (WPI) inflation of over 9%, as the three measures have different coverage and weights.

The GDP deflator covers the entire economy, including investment, government spending, exports and services. The earlier series relied on around 180 deflators, while the new one uses over 300, Saurabh Garg, secretary at MoSPI said.

On manufacturing, the ministry said the negative 1.5% GVA (gross value add) deflator does not mean manufacturing prices fell. Under the double-deflation approach, output and input prices are deflated separately.

If input prices rise faster than output prices, nominal GVA can grow slower than real GVA, resulting in a negative implicit GVA deflator. This does not necessarily imply weaker real GVA growth.

Soumya Kanti Ghosh, a member of the 16th Finance Commission and group chief economic adviser at State Bank of India, dismissed the data concerns in a note. "Revisions are part and parcel of a GDP number. For example, the latest Q1 FY27 numbers which were released in Aug '26 will get finalised by Feb'29 only! This means we have to wait for 30 months to finally know where Q1 FY27 GDP numbers stand. Base revisions add an extra layer to this complicated process," he said.

Global Practice

On the possibility of further revisions to Q1FY27 estimates, Garg of MoSPI said, "We don't expect them to change substantially, but it could be a few tens of basis points that normally happens."

He said revisions undertaken by around 60 countries over the past decade or more showed changes ranging from declines of around 20% to increases of as much as 80% in some cases.