While the current debate was recently triggered by the Government’s release of India’s Quarter 1 (Q1) 2026 controversial Gross Domestic Product (GDP) data figures, it needs to be emphasized at the very outset that scepticism about both the quarterly and annual Indian GDP figures and related Indian data over the last decade is, sadly, at least a decade old now.
There have been raised eyebrows from independent and world-renowned Indian economists like Arvind Subramanium, former Chief Economic Adviser to the Government of India in the early years of the Modi government starting 2014, Dr Raghuram Rajan, RBI Governor till just before demonetization and institutions like the International Monetary Fund (IMF) which recently gave India a C grade partly related to the data issue for around a decade now— from after demonetization and its impacts in 2016-17. The questions have only increased in the last five years post-Covid, starting with the 2022-23 financial year. This scepticism, by and large, has not been about comparisons between calculations made using the old 2011-12 series data and the new 2022-23 series data unlike the current controversy which was triggered by those comparisons but needs to be considered in both a broader timeframe and universe of issues.
The recent trigger was the government’s announcement of a much higher than expected real GDP growth rate of 7.8% for Q1 2026 compared with the same quarter in the previous year. This was based on a downward absolute revision of India’s 2024-25 GDP in current prices by Rs 12.69 trillion using the new series (base year 2022-23) compared to the old series (base year 2011-12). GDP for 2024-25 was recalculated at Rs 317.99 trillion under the new series against Rs 330.68 in the old series.
Consequently, Q1 2024-25 GDP in current prices was reduced from Rs 86.05 trillion in the old series to Rs 80 trillion in the new series, accounting for the 7.8% GDP increase announced for Q1 2026. If this revision had not taken place, Q1 2026 GDP nominal growth would only have been a paltry 2.6% as opposed to the 10.3% nominal growth announced by the government. Using the Government’s own GDP deflator, which is also contested as too low, real GDP growth would then be almost zero as opposed to the Government’s announced higher than expected 7.8%.
There are many reasons for the controversy. Foremost amongst all, hanging like a bleak chapeau, is the cumulative and growing lack of of trust of government data for close to a decade now. This trust deficit only widened and was reinforced when the government abruptly terminated India’s credible independent advisory committee of eminent statisticians and academics in 2024.
Linked to this mistrust, and compounding it, is the government’s lack of data transparency over the last decade, including in this instance. Many valid questions arise. For example, why have the methodology and data sources used for the revised 2024-25 and new Q1 2026 calculations not been made public? The new base estimates were released last year so the data sources and methods should also have been released.
There are also numerous other methodological and technical questions which remain inadequately answered by the Ministry of Statistics and Programme Implementation (MoSPI), the primary focal point in the government for the calculation and release of these figures. These include but are not limited to the following:
- GDP data since at least the 2016 demonetization and the implementation of the first round of the Goods and Services Tax (GST) soon after has been overstated because its assumptions about growth rates for both unlisted companies and the informal sector have been significantly inflated. These growth rates have been extrapolated as the same as the growth rates for the formal organized sector because there is no quarterly data available for those informal or unregistered parts of the economy which account for a significant 45% of the economy. As a result, the overall quarterly and annual Indian GDP growth rates are both gross overestimates. This has particularly been the case since 2016 because thousands if not millions of micro, small and medium enterprises (MSMEs) which ran on cash had to be abruptly shut down, first as a direct result of demonetization, then because of the first failed attempt at GST rollout and then the initial response to Covid when millions of workers went back home to rural areas.
- There just isn’t accurate data for the crucial GDP deflator, especially the Producer Price Index (PPI) which is crucial to its calculation. India has not been able to calculate the PPI for the last 2 decades because producers do not give government the prices which they insist are a trade secret. PPI data can only be obtained from the producer—no one else can provide it. This is unlike the Wholesale Price Index (WPI) which is a market price for which quotations and data can be obtained. Moreover, there is no one PPI value because a producer may sell the same product to different customers at different prices, so the average PPI needs to be calculated by the producer and provided which they have not done for decades. If this has suddenly changed in the last year which is highly unlikely, the Government has yet to provide reliable and adequate proof of this.
- The government’s own official figure of the Consumer Price Index (CPI) is around 4% and WPI is much higher at around 9% so how can the GDP deflator be only 2.5% since, while different, these values are related.
- Without access to reliable and transparent data, it is impossible to estimate the GDP deflator accurately. What the Government has provided as a low 2.5% for Q1 2026 is a guesstimate at best, especially in the absence of transparent PPI and other data needed to calculate the actual GDP deflator.
- Where is the input data? A massive Supply and Use Table (SUT) is needed for this purpose, but this was discontinued by the Government. This should not have been stopped but expanded and more raw data at a certain level of aggregation should be provided so that researchers can reconstruct the index.
Pronab Sen, the first chief statistician of India, recently raised some of these issues and indicated that the reason the new series was not adopted earlier is because India did not have the data and that hasn’t changed substantially. He also indicated that double deflation supposedly used this time is even more data demanding than single deflation which only requires data on the price of final goods, not also of inputs of a much larger number of goods for which quarterly data is not available. He has indicated that output PPI has been used by MoSPI but input PPI could not have been used because it is still in an experimental stage at best. He has also questioned the Q1 2026 9.2% real manufacturing growth rate which is contentious since the deflator in this area was a negative -1.5% which means that input prices were higher than output prices which would make such a high growth rate unlikely. He also asks whether this is normal or an aberration.
At a broader level, the revision and reductions could highlight possible serious problems with the government’s statistical system. They certainly raise many additional questions: is the substantial GDP elimination in the previous year because of better methodologies under the new 2022-23 series or is it because some sectoral value added was double counted in previous years, resulting in overestimation?
Or was that initially high estimate because the government has wanted to boast and broadcast that India was the fastest growing major global economy? If the latter is the case, it is possible that it deliberately increased GDP estimates in the old series for some years and later reduced them when that period had run its course and no one was paying attention to the past and because they wanted to show a better narrative for Q1 2026. In this context, it is striking that all recent revisions have been in one direction—downwards. The large downward revision of 7-8% for last year’s Q1 data is clearly because of overestimation of GDP in the past. GDP at current prices has not just been reduced for last year but also for 2022-23 and 2023-24. Since these annual reductions get carried over to the next year, the cumulative reduction for last year’s GDP was very large.
At a broader level one can also question, as Dr Raghuram Rajan also does, that if India is growing so fast in real terms, why aren’t its big employment, underemployment, employability, ill-suited employment and informal unpaid work-related challenges being addressed? Why are decent formal sector jobs not being created? Why is private investment not picking up at the expected pace? Why are Indian industrialists reluctant to make larger investments in the country? Why is Foreign Direct Investment (FDI) not coming to India in a bigger and more consistent manner?
Most important, why is India in danger of losing its demographic dividend window as both the data and the protests at Jantar Mantar, New Delhi and elsewhere by Gen Z and other Indian citizens so vividly illustrated? Even using the official data which cannot be trusted for the range of reasons this essay has already elaborated, India’s average annual growth rate of GDP (%) during part of the first decade of its peak demographic dividend window (2019-2025) was only 5.4% per annum. This is much lower than Japan (average of 8.7% per annum during 1963-1972), the Republic of Korea (average of 9.4% per annum during1987-1996) and the People’s Republic of China (average of 9.3% per annum during 1996-2005) during their equivalent peak demographic dividend window periods. Even Vietnam’s more recent average GDP growth of 6.2% per annum during its peak demographic dividend window between 2007-2016 was almost a percentage point higher than India’s currently is.
The government should have followed established good practice which it has not done on many counts. In a transition period between the old series data and the new series data and especially given the accumulated distrust of India’s data both among international institutions, independent economists and many ordinary citizens over the last decade, MoSPI should have followed established good practice when a totally new data set was being introduced by running the two datasets in parallel, separately. This would allow credible independent economists and statisticians, its critics, sceptics and the public at large to compare both methodologies and the way the calculations have been made under both series as well as to identify the differences between the two. It is still not too late for MoSPI to do this, although both time and its credibility are fast running out.
ABOUT THE AUTHOR
Kamal Malhotra is Distinguished Visiting Professor at the NALSAR University of Law, Hyderabad, India and a Non-Resident Senior Fellow at TEPAV, The Economic Policy Research Foundation of Turkey. He was a Non-Resident Senior Fellow, Boston University between 2022-2025.
Mr Malhotra retired from the United Nations in September 2021 after a rich career including as its Head and Representative of the Secretary General in Vietnam, Turkiye and Malaysia. He was UNDPs Senior Adviser on Inclusive Globalization prior to that. Other positions held include Director, Overseas and Aboriginal Programme, OXFAM Australia and Director, International Institute of Rural Reconstruction, Philippines. Mr Malhotra also co-founded and co-directed Focus on the Global South.
