Government Releases FAQs Addressing Opposition Concerns on 7.8% GDP Growth
NEW DELHI: The Indian government has issued a set of FAQs to clarify the methodology behind the recent GDP estimates, following opposition concerns regarding the reported 7.8% growth for the April-June quarter. The Ministry of Statistics and Programme Implementation (MoSPI) stated that the FAQs address key issues such as double deflation, implicit deflators, and the differences between GDP deflator, CPI, and WPI inflation.
The updated GDP estimates, based on the 2022-23 base year, were released on August 31. These estimates utilized new data sources and methodologies, including the Output Producer Price Index (PPI) and Banking Services Price Index. The clarification comes in response to Congress leaders questioning the credibility of the 7.8% growth figure and the revisions made to the previous year’s nominal GDP estimate.
Manufacturing Sector Insights
In response to queries about the manufacturing sector’s negative 1.5% implicit GVA deflator despite rising output and input prices, the ministry explained that this figure does not indicate a decline in manufacturing prices. The double-deflation method used separates output and intermediate consumption to calculate real GVA. If input prices rise faster than output prices, nominal GVA can grow more slowly than real GVA, resulting in a negative implicit deflator. For Q1 FY27, nominal GVA in manufacturing grew by 7.7%, while real GVA increased by 9.2%.
GDP Revisions Explained
The government has rejected allegations that the downward revision of last year’s GDP from Rs. 86 lakh crore to Rs. 80 lakh crore was intended to make the current year’s growth appear better. The ministry clarified that the revision reflects changes in the base year, updated data sources, and improved methodologies. The Q1 2025-26 GDP estimate underwent several revisions, with the final figure adjusted to Rs 80.00 lakh crore based on new data and indicators.
The ministry emphasized that the Rs 86.05 lakh crore figure from the old series cannot be directly compared with the current GDP estimate of Rs 88.27 lakh crore under the revised series. The appropriate comparison should be made between estimates from the same GDP series.
Inflation Rate Discrepancies
Regarding the discrepancy between the 2.5% implied GDP inflation rate and higher consumer (CPI) and wholesale (WPI) inflation rates, the ministry noted that these measures serve different purposes. CPI tracks consumer prices, while WPI covers wholesale goods. The GDP deflator encompasses a broader economic scope, including investment and government spending, and does not need to align with CPI or WPI.
Statistical Discrepancies and Future Revisions
The ministry addressed concerns about high statistical discrepancies in both current and constant-price GDP estimates for Q1 2026-27. It clarified that these discrepancies arise from differences between GDP estimates compiled through production and expenditure approaches. The current estimates are based on available data and are subject to revision as more comprehensive information becomes available. The ministry stated that the current discrepancies do not necessarily indicate significant future revisions.
The government’s response follows criticism from Congress leaders, who have questioned the integrity of the GDP figures. Congress general secretary Jairam Ramesh cited former finance secretary Subhash Chandra Garg, who argued that without the revisions, current-price growth would have been 2.6%. According to MoSPI data, India’s real GDP grew 7.8% in Q1 FY27, with nominal GDP at Rs 88.27 lakh crore, reflecting a 10.3% increase from the previous year. The next quarterly GDP estimates are set to be released on November 30, 2026.
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