The Ministry of Statistics and Programme Implementation (MoSPI), the Government of India’s statistical agency, released the first-quarter 2026-27 (Q1-2027) gross value added (GVA) and gross domestic product (GDP) estimates on 31 August.
The press release issued by MoSPI claimed that India’s real GDP recorded growth of 7.8 percent in Q1-2027, compared with growth of 6.9 percent in Q1-2026. In nominal terms (at current prices), the GDP recorded growth of 10.3 percent in Q1-2027 against growth of 8.1 percent in Q1-2026, the press release further said.
Everyone seems to be overjoyed as the growth numbers beat everyone’s estimates, the Reserve Bank of India (RBI) included. Prime Minister Modi called this “exemplary growth” and a “herculean feat.” Finance Minister Sitharaman saw this as proof of continuous government reforms and agile economic management. The Chief Economic Advisor (CEA) found India’s strong first-quarter GDP growth a demonstration of the economy’s continued resilience against global headwinds.
The growth of 7.8 percent in Q1-2027, in the face of turmoil in the oil and gas market thanks to the completely unjustified US-Iran war, does look great optically. But is it real?
Last year, in the press release on 29 August 2025, MoSPI/GoI had estimated Q1-2026 growth at an identical 7.8 percent, which has now been revised down to 6.9 percent. Is the downward revision in last year’s growth primarily responsible for the higher growth? Or are there deeper mechanics at work, including the retrofitting of last year’s first-quarter numbers to boost the growth rate to a seemingly respectable 7.8 percent?
The Game is in Current-Price Growth
The press release issued on 31 August 2026 places India’s first quarter 2026-27 GDP in current prices at Rs 88.27 trillion. The same press release estimates India’s first quarter 2025-26 GDP in current prices at Rs 80.00 trillion. This yields growth of 10.3 percent.
The first quarter GDP for 2024-25 has been estimated at Rs 74.03 trillion, making the Q1-2026 growth of GDP in current prices 8.1 percent. The Q1-2027 GDP growth at 10.3 percent is certainly higher than growth of 8.1 percent in Q1-2026, given higher inflation in the current year.
The nominal GDP for Q1-2026, however, was not Rs 80.00 trillion with a growth rate 6.9 percent when the GDP press release was issued last year in August 2025. The Government had claimed that India had achieved a higher real GDP growth rate of 7.8 percent. The GDP at current prices in Q1-2026 was estimated at Rs 86.05 trillion in the August 2025 press release. Yes, Rs 86.05 trillion and not Rs 80.00 trillion, to which it has now been revised.
Government growth estimates/claims go for a toss drastically the moment you compare this year’s GDP (in current prices) with that of GDP (in current prices) for the same quarter announced last year. The GDP of Rs 88.27 trillion in Q1-2027 is only 2.6 percent higher than the GDP of Rs 86.05 trillion in Q1-2026. Yes, only 2.6 percent.
That lowly growth shows an awfully poor GDP performance in the Q1-2027 in current prices. If you take even a 2 to 2.5 percent inflation/deflator factor in the 2026-27 first quarter over the same quarter last year, the real GDP growth completely disappears, reducing it to zero (not 7.8 percent as claimed).
The government has been using this toolkit for the last few years, of over-projecting GDP in the concerned current year by showing high GDP growth in current prices and low or no inflation. In 2024-25 also, the Q1 GDP in current prices, which was announced at Rs 70.25 trillion in the press release of August 2024, has been reduced to Rs 66.81 trillion.
It may be recalled that the government had revised down the 2023-24 GDP (current prices) by as much as Rs 11.4 trillion (from Rs 301.23 trillion to Rs 289.73 trillion) when the new series of GDP was issued earlier this year.
The method is simple. Revise down the GDP of the year gone by to show the present year’s performance in much better colours. No one cares to see this revision of last year’s numbers, is the time tested belief. Don’t be surprised if the 2026-27 first quarter GDP is revised down next year (in August 2027) to show the 2027-28 Q1 performance better.
Sectoral Performance is a Mess and Alarming
If one were to compare the Q1-2027 performance for the eight GVA sectors against their claimed GVAs last year, a messy and horrifying picture emerges.
Agriculture, mining, and electricity sector GVA growth shoots up sharply (much higher than what the MoSPI press release says). Agriculture had GVA of Rs 12.00 trillion in Q1-2026. It has grown to Rs 14.00 trillion in Q1-2027, giving a year-on-year (YoY) growth of 16.7 percent. Mining GVA grew from Rs 1.36 trillion to Rs 1.78 trillion, generating growth of 31 percent. Electricity GVA went up from Rs 2.04 trillion to Rs 2.29 trillion, yielding a growth of 12.2 percent.
Construction and financial services, taking Q1-2026 GVA, as per the August 2025 press release, show much smaller growth in Q1-2027. Construction (Rs 6.77 trillion if not revised to Rs 6.24 trillion now) would have given a growth of 7.27 percent (instead of 16.5 percent as per the 31 August press release) and financial services (Rs 20.71 trillion if not revised to Rs 19.34 trillion) would be only 5.3 percent higher (in place of 12.7 percent).
The worst performance is in:
Manufacturing
Trade, hotels, transport, communications, services groups
Public administration sectors
The downward revision of their GVA in Q1-2026 from Rs 10.92 trillion to Rs 9.61 trillion, from Rs 12.28 trillion to Rs 10.53 trillion and from Rs 12.17 trillion to Rs 9.96 trillion respectively has led to improvement in their GVA growth from -5.2, -2.2 percent and -9.2 percent (actual) respectively to a high of 7.7 percent, 14.0 percent and 11 percent (as claimed in the 31 August press release) respectively.
On the expenditure side, the major downward adjustment has been made to private consumption (PFCE). It has been revised for Q1-2026 from Rs 51.87 trillion to Rs 44.66 trillion, resulting in a negative consumption growth of as much as -5.4 percent in relation to the PFCE of Rs 49.08 trillion. That perhaps explains why the pain of weak consumption felt in real life has got hidden in these restated numbers.
The gross capital formation expenditure (GFCE), having been revised down marginally, would have still yielded impressive growth of 15.5 percent as against 20.4 percent claimed by MoSPI.
Why did MoSPI decide to revise down the sectoral GVA for Q1-2026 so sharply and violently? The current GDP/GVA numbers are not supposed to vary so widely as these are sourced from the actual corporate and other government data. Did the selective application of double digit deflator do the trick or there were some other motivations at work?
The Reality of Real GDP Growth Is Problematic
The stock market sold off today. The RBI, after enabling considerable foreign exchange inflows through quite costly mechanisms, did heavy lifting to see that the rupee appreciate somewhat. Foreign investors keep selling.
The government did everything it could do to ensure that capital expenditure was kept up for GFCF to report better (there is no real momentum on the private capex side, though).
It does not really do the Indian economy any good if these designer numbers are served to impress the people. The economy is in a difficult spot. It is better to recognise it and set about taking all necessary corrective and reform steps instead of pulling the wool over everyone’s eyes.
(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.)