India’s economy expanded 7.8% year-on-year in the three months through June, outpacing a 7.1% Reuters poll forecast, but the figure has drawn scrutiny over the methodology used to calculate gross domestic product.
The growth rate, reported by the statistics ministry, marks a sharp contrast with nominal GDP figures that would have been 2.6% under the previous calculation series. Under the revised methodology introduced in February, nominal GDP for April–June 2025 was reported at 80 trillion rupees ($850 billion), down from 86.05 trillion rupees under the old series. The exchange rate used was $1 = 94.4725 Indian rupees.
Critics argue the revision inflates the year-on-year comparison by reducing the prior period’s GDP base. Former Finance Ministry bureaucrat Subhash Chandra Garg described the growth as a result of "statistical gymnastics," while former Reserve Bank of India Governor Raghuram Rajan questioned why strong GDP figures have not translated into visible gains in employment, domestic investment, or foreign portfolio inflows.
The government’s deflator—a measure of price changes used to adjust nominal to real GDP—stood at 2.3% for the quarter, significantly below retail inflation of more than 4% and wholesale inflation exceeding 9%. Societe Generale economists noted that the low deflator raises doubts about the underlying strength of real economic activity. ICICI Securities Primary Dealership highlighted that while the deflator remains below input and output price pressures, it aligns with input prices rising faster than output prices.
High-frequency indicators present a mixed picture. Auto sales surged 21% in August, bank credit growth hit a decade-high of 19%, and net direct tax revenue rose over 23% year-on-year in the April–August period. The producer price index now incorporates more than 300 deflators for inputs and outputs, up from about 180 previously.
The debate over India’s growth figures comes amid broader concerns about data transparency and the reliability of economic statistics, with political figures and analysts calling for greater scrutiny of the methodology.
