Industry Odisha Bureau, Sep 06: India’s revised GDP estimates have triggered fresh statistical scrutiny. Historical nominal GDP figures were revised sharply downward recently. The new methodology introduced significant changes to calculations. PPI’s rapid inclusion in GDP has raised transparency concerns. This debate centres on credibility, not just growth direction.
India shifted to a new GDP base year: 2023-24. This methodology addresses weaknesses from the earlier 2011-12 series. Changes include current survey data for unorganised sectors. Double deflation was introduced specifically for manufacturing calculations. Supply-use data now helps reduce production-expenditure discrepancies.
These upgrades responded partly to IMF data-quality concerns. The IMF had rated India’s national accounts a “C”. This reflected shortcomings that somewhat hamper effective surveillance. Notably, the revised methodology reduced India’s estimated economic size. This contradicts typical outcomes from methodological revisions elsewhere.
A 2022 IMF paper examined 78 economies’ revised national accounts. Those economies saw a median GDP increase of 3.5%. Data For India highlighted this comparison against India’s outcome.
Quarterly estimates for 2022-23 through 2024-25 were revised downward. Q1 and Q2 periods saw particularly sharp corrections. Q1 FY26 alone saw a ₹6 trillion downward revision. Full-year FY26 revisions totalled around ₹11 trillion downward. These stem from corrections to earlier overestimations, officials suggest.
Such revisions matter because fiscal ratios use GDP denominators. Fiscal deficit and government debt figures could be affected. Nominal GDP revisions don’t necessarily signal real economic contraction though.
Attention has also turned to the GDP deflator itself. In Q1 FY27, the deflator stood at just 2.3%. Retail inflation averaged 3.9% during the same period. Wholesale inflation was considerably higher, at 9.4%. This gap between deflator and inflation attracted scrutiny.
Officials attribute this partly to double deflation’s adoption. This method adjusts input and output prices separately. Manufacturing used PPI instead of WPI for calculations. PPI stood around 9%, yet manufacturing deflator was -1.4%. This can occur when input costs outpace output prices.
PPI itself has become a central transparency concern. The Commerce Ministry compiles this relatively new index. PPI launched only in June, with data from April 2023. Earlier methodology papers hadn’t flagged its swift inclusion.
Former chief statistician Pronab Sen questioned PPI’s sudden availability. He noted India tried compiling PPI for nearly three decades. Companies had resisted sharing pricing data competitively, he said. Sen called PPI the right measure but flagged transparency gaps.
A government working group, formed in January 2025 under Ramesh Chand, reviewed PPI compilation methodology. Its detailed framework remains publicly available now. Yet rapid GDP inclusion continues raising credibility questions among economists.
