Govt defends new GDP estimates, says revisions reflect data upgrades, not higher growth by design
The government has brought in new producer price index, banking services price index and additional administrative data.
The statistics ministry on Wednesday defended the methodology behind its newly released economic growth estimates, saying revisions to last year's GDP and the divergence between different price measures reflect updated data and estimation techniques rather than an attempt to artificially boost headline growth.
The clarification came two days after the government released an updated series of annual and quarterly GDP estimates with 2022-23 as the base year, incorporating a new Producer Price Index (PPI), Banking Services Price Index and additional administrative data.
The ministry's detailed questions-and-answers addressed concerns ranging from negative implicit price deflators in manufacturing to the sharp difference between nominal and real growth in mining, as well as the sizeable statistical discrepancy between production- and expenditure-side estimates.
India's economy grew 7.8% in real terms in the first quarter of fiscal 2026-27, according to the revised GDP series.
The ministry said a negative implicit GVA deflator for manufacturing should not be interpreted as evidence that factory-gate prices declined.
Manufacturing GVA in the June quarter was compiled using a double-deflation method, under which output and intermediate consumption are separately adjusted for price changes before real GVA is derived. When input prices rise faster than output prices, nominal GVA can grow more slowly than real GVA, producing a negative implicit deflator even when both output and input prices are increasing.
Manufacturing real GVA grew 9.2% in the quarter compared to nominal growth of 7.7 per cent, resulting in an implicit GVA deflator of minus 1.5%, the ministry said.
It cited textiles and cotton ginning, basic metals, and rubber and plastic products among activities where input-price growth exceeded output-price growth.
The ministry also pointed to international experience, saying negative or volatile manufacturing deflators can emerge in economies using double deflation during periods of energy and raw-material price shocks.
Agriculture presents a different case because quarterly agricultural GVA is first estimated at constant prices using production data, with current-price estimates subsequently derived using the relevant producer-price index. The agriculture, forestry and fishing output PPI rose about 5% in the quarter, resulting in a positive implied inflation rate of 3.9%, the ministry said.
It also rejected claims that the Q1 2025-26 current-price GDP estimate was reduced from Rs 86.05 lakh crore to Rs 80 lakh crore to make the latest growth rate appear stronger.
The latest explanations are aimed at addressing questions about how the new series captures price movements, sectoral activity and revisions to historical estimates.