New GDP series captures structural changes in economy, reflects global best practices: N K Singh

Chairman of 15th Finance Commission N K Singh on Thursday backed the new GDP data series which showed a 7.8 per cent economic growth in the June quarter, saying it captures the significant changes in India's economic structure, particularly the rapid expansion of the services sector, and is in line with international best practices.

Singh also said that the upgrade in India's sovereign rating after 38 years to an 'A' grade reflects the far-reaching structural reforms undertaken by the Modi government since 2014, and sustained macroeconomic stability.

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


Japan Credit Rating (JCR) on Wednesday upgraded India's rating from 'BBB+' to 'A-', with a stable outlook, citing "solid" economic growth, effectiveness of economic policies that strengthen the foundations for growth, and the improved soundness of the financial system.

Singh said the GDP data with a revised 2022-23 base year captures many more data and segments, and base year revision to calculate national accounts is a common practice. The base year of the national accounts has been revised from 2011-12 to 2022-23.

"Countries change their base year to reflect change in realities, and change in nature of economic activity. The service sector, for instance, has made an enormous change in India. The composition of the GDP has undergone a tectonic change. A new set of data really captures these new changes. It is in line with best international practice. It is in line with what we have done separately before," Singh said on the sidelines of the 10th CII National School Education Summit.

Since the Q1 GDP growth numbers came in at 7.8 per cent, much higher than expected and even above the 7 per cent estimated by the RBI, critics have been questioning the sanctity of the data.

The government has already dismissed criticism around the calculation methodology saying that the comparison of the Q1 GDP estimates needs to be understood in the context of the revisions made to the GDP series.

Also read: ‘I was shocked’: Neelkanth Mishra hits back at ‘egregiously wrong’ claims on India’s GDP growth

On India getting back in the 'A' grade for sovereign credit ratings Singh said this upgrade has come at a time when India's economy has shown a 7.8 per cent growth rate in June quarter. The growth in March quarter is estimated at 8.6 per cent, while in the June quarter of last year it was 6.9 per cent.

"The credit upgrade represents the far reaching structural reforms, which have been undertaken both in 2014 by the Modi government. Last time, we saw the magical figure of A, was in 1988. But we lost it during the 1991 economic challenge. After that, the changes were not adequate to persuade, leading credit rating agency to make a credit upgrade. Why have they chosen 2026?

"It represents a moment of celebration. So, macroeconomic stability and the congruence of structural changes, with continued macroeconomic stability, and the continuation of the reform process... It represents a moment of change," said Singh, who steered the 15th Finance Commission whose report spanned a six-year period till 2026.

India was assigned an 'A2' rating by Moody's in 1988. The rating was downgraded at the time of the Balance of Payments (BoP) crisis in 1990-91.