Subhash Garg Writes: Centre's FAQs on GDP Revision Lack Crucial Supporting Data

GDP row: Former finance secy Garg demands specific details of 'updated data sources and improved methodologies'.

The government should investigate and inform about which of the three possibilities—elimination on account of better methodologies, data series etc; overestimation on account of double-counting, counting errors etc; or deliberate jacking up of the GDP—were at work, writes Subhash Chandra Garg.

(Photo: Kamran Akhter/The Quint)

In my piece for The Quint (India’s 7.8% GDP Growth: Is Government Data Really What It Seems?) on 2 September, I underlined the issue of massive reduction/anomaly in India’s Gross Domestic Product (GDP), in current prices, in the new series (base 2022-23) compared to the old series (base 2011-12), of Rs 12.69 trillion in 2024-25 (Rs 317.99 trillion in the new series against Rs 330.68 trillion in the old series).

Using the case of Q1-2026 GDP at current prices, which was reduced from Rs 86.05 trillion (in the old series) to Rs 80.00 trillion (in the new series), I argued that if the old GDP of Rs 86.05 trillion was used unchanged as the GDP at current prices of Q1-2026, the nominal GDP growth of the quarter was only 2.6 percent instead of 10.3 percent, claimed in the Government of India's press release, and the real GDP growth close to zero (taking the deflator of 2.5 percent used by the government).  

My comments on NDTV (and some other channels) and the piece in The Quint have generated considerable interest and debate in the country—which is still raging.

The Ministry of Statistics and Programme Implementation (MoSPI) also issued a detailed clarification [Additional Information related to GDP Estimates Received After Release of Q1 Estimates of FY 2026-27], seeking to address the issue of lowly 2.6 percent growth in Q1 2026-27 GDP current prices, and also a few other related issues.  

Have the clarifications shed better light on the issue of massive reduction in GDP in new series? Or will the government have to do more work and come out clean?

Reduction of Current GDP from Rs 86 Trillion to Rs 80 Trillion

The issue has been sought to be addressed in point 2 of the Additional Information note. The government states that the "comparison of the Q1 GDP estimates needs to be understood in the context of revisions made in the GDP series". It further asserts that the "change in the estimate of Q1 2025-26 does not represent a downward revision made to make the current year’s growth appear higher".

The government argues that it "reflects successive methodological and data revisions to the GDP series."

For the revision made to Rs 80.32 trillion in February 2026, it said that, as "part of the base-year revision, the GDP estimates for the entire time series are comprehensively revised to incorporate updated data sources, improved methodologies, revised coverage, and other relevant information."

No specific details of any of these updated data sources, improved methodologies, etc was provided.

The government, in the remaining justification on the issue, makes no argument; instead, it mechanically recounts four revisions made in the Q1 estimates, including the estimate of Rs 86.05 trillion on 29 August 2025.  

The note further states two more revisions carried out—to Rs 80.44 trillion at the time of release of Provisional Estimates of GDP for 2025-26 on 5 June 2026 and to Rs 80.00 trillion on 30 August 2026.  

On the issue of why Q1 2025-26 GDP of Rs 86.05 trillion was reduced to Rs 80.00 trillion, the press release simply says that the "estimates from the old 2011-12 series cannot be directly compared with the current Q1 2026-27 estimate under the revised 2022-23". The government did not say why.  

The government's explanation on the issue is unsatisfactory, officialese, and obfuscatory. The GDP estimates for any particular year/quarter in current prices (nominal GDP) cannot and should not change only because of change in base year.  

The goods and services value added or consumption for any particular year or quarter remains the same when a base year is changed, in every case, except for capture of goods and services in the new series which had remained unaccounted for in the GDP in the old series.  

Therefore, the GDP at current prices, in all normal cases, would either remain more or less unchanged or somewhat go up. The GDP at current prices cannot go down.  

In the case we have, the Q1 2025-26 GDP at current prices went down by as much as Rs 6 lakh crore, close to 7 percent.  

The government, if it believes that ‘updated data sources, improved methodologies, revised coverage, and other relevant information’ could have resulted into such drastic reduction (disappearance of GDP counted earlier), must provide specific information about what goods and services got destroyed on account of updated data source, improved methodologies, or revised coverage.

Until every such specific details are provided (which in my judgement does not really exist), it would be possible to believe that mere recital of the mantra of ‘updated data sources, improved methodologies, revised coverage, and other relevant information’ resulted into loss of Rs 6 trillion GDP in 2025-26 Q1 GDP at current prices. 

What Really Happened in Q1 2025-26?  

There are two good possibilities.  

First, the statistical system committed some blunders—some sectoral value added was double counted or there were mistakes in adding up or in subtracting or all of these—resulting in overestimation of GDP by Rs 6 trillion in Q1 2025-26 in the old series.

The government must find out and, if this was the case, make a clean breast of the errors and mistakes made by providing all details of where these were committed and the corrections made in the new series.  

Second, the government, wanting to broadcast to the world that India was the highest growing major economy, deliberately increased the GDP estimates in the earlier series for some years and later reduced it when the narrative for that particular period had run its course and needed to be shifted for making the future year look better.

This case needs to be examined over a larger period from 2022-23, which suggests that this was indeed the case.

Toolkit of Increasing and Decreasing GDP 

The GDP at current prices for the year 2022-23 was estimated at Rs 268.90 trillion in the old series. In the new series, it has been reduced to Rs 261.77 trillion, a reduction of Rs 7.13 trillion.

The GDP for 2023-24 in the old series was Rs 301.23 trillion and has been reduced to Rs 290.73 trillion in the new leading to a reduction of Rs 10.50 trillion in GDP.  

The GDP of 2024-25, which was Rs 330.68 trillion in the old series, has been reduced to Rs 317.99 trillion, a reduction of Rs 12.70 trillion.  

As the reductions get carried over to next year, the net reduction in the three years (from 2022-23 to 2024-25) is Rs 12.70 trillion or 3.84 percent of the 2024-25 GDP.

This reduction would get carried forward upto the third quarter of 2025-26 as the estimates, in the old series, are available only up to that quarter.  

The question of reduction of Rs 6 trillion in Q1 2025-26 is actually a part of the issue of disappearance of Rs 12.70 trillion GDP captured for 2024-25. The government must provide details and facts of what accounts for this missing GDP.  

The government should also investigate and inform about which of the three possibilities—elimination on account of better methodologies, data series etc; or overestimation on account of double-counting, counting errors etc; or deliberate jacking up of the GDP—were at work.  

If all the three possibilities were in action, let it be so stated by quantifying their separate contributions.  

Other Clarifications 

Of the five other clarifications, point 6 (whether GDP estimates would be revised significantly in the next revisions) is proforma. The remaining four relate to determination of real GDP from the nominal (current prices) GDP.

Point 1 relates to negative inflation in manufacturing GVA on account of introduction of double deflator.

Point 3 relates to reconciliation of 2.5 percent implied GDP inflation when consumer price index (CPI) inflation rate was 3.9 percent and wholesale price index (WPI) was 9 percent.

Points 4 and 6 relate to double deflation in private final consumption expenditure (PFCE) and massive gap between nominal GVA and real GVA of mining sector.  

Many economists have asked for more details of the methodologies, including collection system for producer prices (input and output) etc, for determination of real GDP. This discussion will go on for long.  

The point 3 relating to apparent unlikelihood of deflator for Q1 2026-27 being only 2.5 percent when both retail and WPI inflation was much higher needs to be examined carefully at this stage.

The government says that the implicit GDP deflator is "the ratio of GDP at current prices and GDP at constant prices and it covers the entire economy, including government spending, corporate investments, exports and financial and non-financial services (like banking, IT, and real estate)."

The government further asserts that "since raw material prices were very high and certain service sector inflation is very low, it diluted the high inflation seen in the consumer and wholesale commodity sectors". This has been asserted without providing any specific details.  

Logically, if input prices are high, the inflation would be captured in the deflator relating to inputs goods, and there should not be any overall reduction on deflator. The government has not applied double deflator to all the sectors as of now. 

The government would do well to construct a complete deflator index dividing the universe of all goods and services in three classes broadly:

• consumer products and services,

• producer/ wholesale products and services, and

• rest of the goods and services, with as much further disaggregation as possible

This index would help address the apparent discrepancy in the Q1 deflator being 2.5 percent while the inflation in consumer products and services is over 4 percent and in wholesale goods over 9 percent.  

Until granular details are provided on what are the rest of the goods and services and which ones of these suffered negative or low inflation, the question mark on the serious question of the lowly 2.5 percent deflator will not go away.

Link to the Claim of the Fastest Growing Major Economy 

Both the GDP at current prices and deflator impact the generation of final GDP growth number.  

When too much of the government prestige rides on achieving and maintaining the claimed tag of being the fastest major growth economy, the possibility of manipulating both these parts of the GDP growth cannot be ruled out.  

Let all the needed information be provided for making an objective assessment of nominal GDP growth and deflator in India since 2022-23.  

Only then the trust in government data and credibility in the claim of the fastest growing major economy will return.

(Subhash Chandra Garg is the Chief Policy Advisor, SUBHANJALI, and Former Finance and Economic Affairs Secretary, Government of India. He's the author of many books, including 'The $10 Trillion Dream Dented, 'We Also Make Policy', and 'Explanation and Commentary on Budget 2025-26'. This is an opinion piece, and the views expressed above are the author’s own. The Quint neither endorses nor is responsible for the same.)