Govt defends revised GDP series, says changes driven by data and methodology

The government on Wednesday defended the methodology underpinning India’s newly released economic growth estimates, saying revisions to last year’s GDP and differences between various price measures reflect updated data and estimation techniques, rather than an attempt to inflate headline growth. 

The clarification came two days after the government released a revised series of annual and quarterly GDP estimates, with 2022-23 as the new base year. The updated series incorporates a new Producer Price Index (PPI), Banking Services Price Index, and additional administrative data. 

The statistics ministry, in a detailed set of questions and answers, addressed concerns over several aspects of the revised estimates, including the negative implicit price deflator for manufacturing, the divergence between nominal and real growth in mining, and the sizeable statistical discrepancy between production- and expenditure-side estimates. 

India’s economy grew 7.8% in real terms in the first quarter (Q1) of fiscal 2026-27, according to the revised GDP series. 

Ministry says GDP revisions reflect updated data and methodology 

On the negative 1.5% implicit GVA deflator for manufacturing in Q1FY27, the ministry said this should not be interpreted as a fall in manufacturing prices. It stressed the need to distinguish between output and input price deflators and the implicit GVA deflator. 

A negative inflation rate in the manufacturing GVA implicit deflator, therefore, does not necessarily mean that prices of manufactured goods have declined, the ministry said. 

The ministry also rejected concerns that the downward revision to the previous year’s GDP had been made to make the latest growth figures appear stronger. 

The estimate for Q1FY26 current-price GDP was revised from around ₹86 lakh crore to ₹80 lakh crore. According to the ministry, however, the change was the result of successive methodological and data revisions and was not intended to boost the current year’s growth rate. 

The ministry said comparisons between the first-quarter GDP estimates need to be viewed in the context of the broader revisions to the GDP series. It added that the revised estimates incorporate updated data and improved estimation methods. 

GDP deflator differs from CPI, WPI, ministry explains 

The ministry also sought to explain the gap between the 2.5% implied GDP inflation rate and consumer and wholesale inflation. CPI inflation was 3.9% while WPI inflation was above 9% during the period under consideration. 

According to the ministry, there is no inherent inconsistency between these measures because they capture different aspects of the economy and use different coverage and weights. The GDP deflator represents an implied price measure of net value added, rather than a direct measure of transaction prices. 

On the use of double deflation in calculating Private Final Consumption Expenditure (PFCE), the ministry said the methodology does not directly enter PFCE calculations. Double deflation is instead a production-side technique used to estimate an industry's GVA at constant prices by separately deflating gross output and intermediate consumption, it said.