Why was ₹6 lakh crore shaved off last year’s GDP? Govt explains the numbers

The government on Wednesday rejected the claim that it revised down last year’s current-price GDP from ₹86 lakh crore to ₹80 lakh crore to make this quarter's growth rate look better, saying the difference is the result of changes to the GDP series, improved data and successive revisions.

The issue has come into focus after India reported 7.8% real GDP growth in the April-June quarter of FY27. The argument is that if last year’s original current-price GDP estimate of ₹86.05 lakh crore had been retained, the increase in nominal GDP this year would have looked much smaller.

The government, however, said that comparison is not valid because the ₹86.05 lakh crore figure was calculated under the old 2011-12 base-year series, while the latest Q1 FY27 figure is from the new series with 2022-23 as the base year.


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Why did ₹86 lakh crore become ₹80 lakh crore?

Q1 FY26 current-price GDP was initially estimated at ₹86.05 lakh crore on August 29, 2025, under the then-existing 2011-12 base-year series.

After the new GDP series was introduced in February 2026, the estimate for the same quarter became ₹80.32 lakh crore. It was then revised to ₹80.44 lakh crore with the provisional FY26 GDP estimates released on June 5. After new Index of Industrial Production and Producer Price Index data became available, it was revised again to ₹80 lakh crore.

The government said the movement 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.”

It specifically rejected the suggestion that the revision was made to mechanically boost the current year’s growth rate.

“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 government said.

It also said the old ₹86.05 lakh crore estimate “cannot be directly compared” with the current Q1 FY27 estimate because they belong to different GDP series.

The government further explained that India’s quarterly GDP estimates use the “benchmark-indicator approach”, where quarterly estimates are guided by 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,” it said.

Why is manufacturing showing ‘negative inflation’?

The government also addressed questions over manufacturing’s -1.5% implicit GVA deflator in Q1 FY27.

Manufacturing’s nominal GVA grew 7.7%, while real GVA grew 9.2%. This does not mean manufacturing prices broadly fell.

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Under the new system, output and intermediate consumption are deflated separately. In simple terms, the prices of what factories produce and the prices of the inputs they buy are treated separately when calculating real GVA.

The government explained: “If input prices rise faster than output prices, nominal GVA can grow slower than real GVA, causing a negative implicit GVA deflator.”

The ministry said this can happen in sectors such as textiles and cotton ginning, basic metals, and rubber and plastics.

Why doesn't GDP inflation match CPI or WPI?

The government also explained why the roughly 2.5% inflation implied by GDP can be very different from CPI inflation of 3.9% and WPI inflation of more than 9%.

CPI measures price changes for a specific basket of household consumption. WPI covers bulk commodities, raw materials and manufactured goods at the wholesale level and excludes services.

The GDP deflator is different. It is “the ratio of GDP at current prices and GDP at constant prices” and covers the entire economy, including government spending, corporate investment, exports and financial and non-financial services.

The government said the GDP deflator therefore “need not move in line with either CPI or WPI”. It added that more than 300 individual price deflators are used at the item or item-group level, with the GDP deflator being a derived measure of their overall price impact.

What about the other GDP calculations?

The government also clarified that double deflation does not directly enter the calculation of private final consumption expenditure (PFCE).

“Double deflation is a production-side technique used to estimate the Gross Value Added (GVA) of an industry at constant prices by deflating gross output and intermediate consumption separately,” it said.

PFCE measures final spending on goods and services, so there is no intermediate consumption to subtract. At the quarterly level, it is estimated using detailed item-level volume indicators and relevant price indices.