GDP figures for the first quarter of the current financial year were released on Monday. Some people raised questions about the figures. After which now the Ministry of Statistics and Program Implementation (MoSPI) has issued its clarification on the questions and criticisms being raised regarding India’s 7.8% GDP growth rate in the first quarter (April-June).
In fact, after former Finance Secretary Subhash Chandra Garg and some economists raised questions on the calculation process of the figures, the Ministry clarified that no alteration or mechanical increase has been made in the growth rate figures.
Revision of base year and old GDP data
Subhash Chandra Garg’s allegation was that the current prices (Nominal GDP) estimate for last year (Q1 FY26) was reduced from ₹86.05 lakh crore to ₹80 lakh crore, so that the growth rate of the current year appears higher. In response, the ministry said that the figure of ₹86.05 lakh crore was under the base year 2011-12 (Old Series).
When the 2022-23 base year was applied, the previous quarter base under the data source and the new series of Index of Industrial Production (IIP) became ₹80.32 lakh crore (later revised to ₹80 lakh crore). So making a direct comparison of two different base year series is completely wrong, and the critics are misrepresenting it.
Mathematics of Negative Deflator (-1.5%) in Manufacturing Sector
Critics had also raised the question that when the prices of both production and raw materials have increased, then how did the implicit GVA deflator of manufacturing remain at minus 1.5%. In response to this, the government says that Double-Deflation Method is now used in India, in which the prices of output and raw materials are adjusted separately.
When raw material rates rise faster than output prices, real GVA growth appears to be higher than nominal GVA. The ministry argues that in Q1, nominal GVA was 7.7% and real GVA was 9.2%, resulting in a deflator of -1.5%. This does not mean that the products have become cheap.
Not only this, the ministry, citing OECD research, said that it is a natural economic process to see a negative deflator in countries using double deflation during global energy and raw material shocks.
MoSPI says that new and more accurate data sources, such as Producer Price Index (PPI) and Banking Services Price Index have been included in the calculation of GDP figures. Therefore, the growth rate of 7.8% is based on economic realities and internationally accepted practices.
PM Modi calls 7.8 percent GDP growth a growing India
Let us tell you, as soon as the GDP figures came on Monday, Prime Minister Narendra Modi wrote on Twitter, ‘Despite global uncertainties, surge in crude oil prices and supply chain constraints, the Indian economy has proved its strength.’ He also said that by rejecting all the projections of pessimists, India has once again proved to the world its economic stability and ability to grow rapidly.
Finance Minister Nirmala Sitharaman says that India has achieved excellent economic progress in the first quarter of the financial year 2026–27. Real GDP growth rate was recorded at 7.8%, while nominal GDP growth was 10.3%. Whereas the real GVA growth rate has been recorded at 8.2%, which is an indication of excellent performance in the production and services sector.
It is noteworthy that the growth rate for April-June was estimated by many economists to be 7.1-7.2 percent. Which the Indian economy has left behind. In the same quarter last year, the Indian economy had grown at a pace of 6.9%.
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