The claim of Mr. Subhash Garg, former Finance Secretary that the Indian economy actually grew by only 2.6 per cent, and that the 7.8 growth rate as officially claimed is due to data jugglery as the downward revision of the current prices propped up the latest GDP numbers, kick-started a fierce debate in the country. Mr. Subhash Garg made a serious allegation that methodological change was done to deliberately revise down previous year’s figures to make this year’s GDP growth rate higher on a lower base.
At the outset, it must be recognized that the estimates are estimates only and they are not perfect and can be made better. It must also be recognized that if the government wants it can do data manipulation at different levels and it might not be easy to detect that from outside. Hence, it would be futile to engage into such debate without some credible information. Instead, one can examine whether the 7.8% growth rate looks realistic by comparing it with other economic indicators and whether there was justifiable reason to go for change in methodology and the change in the base year in particular.
A simple question that some critics are raising is how India could do so well in a situation of so much global disruptions and uncertainty. However, one would be also surprised to note that overall exports of India in the same (first) quarter of 2026-27 has increased by 11.37% to reach US$ 236.28 billion and merchandise (goods) exports rose by as high as 15.92% to reach US$ 129.32 billion. Now compare these with the figure of two previous years. In the first quarter (April-June 2025), India’s overall exports, merchandise and services combined, reached USD 209.0 billion, surpassing the previous year’s Q1 figure of USD 202.5 billion, registering a growth of just 3.21 per cent. The overall merchandise exports in the first quarter of 2025-26 was US$111.56 billion which was 2.17 per cent lower than US$ 114.03 billion in the same quarter of the previous year.
Thus exports performance in the first quarter of 2026-27 was substantially higher than the same in the corresponding quarter in the previous year. Can such a huge exports performance be achieved with just a 2.6% GDP growth as claimed by Mr. Subhash Garg? Are these exports figures also manipulated?
International trade data is generated by a separate mechanism. While data for merchandise trade is generated by Directorate General of Commercial Intelligence and Statistics (DGCI&S), data for services trade are given primarily by the Reserve Bank of India thought DGCI&S is also collecting services trade data now. As a matter of fact, export figures are nearly impossible to fudge as they are also reflected in imports figures of partner countries. Moreover, these trade data is dollar-denominated and hence not affected by domestic inflation. Hence, the 7.8% quarterly growth rate may not be unrealistic and quite credible.
Now why the changes in methodology and the base year were necessary? In 2024, as IMF (International Monetary Fund) rolled out a multi-tier rating framework, Indian economic statistics got an overall “B” grade but got a “C” grade for its GDP data. This rating was retained by IMF even in 2025. With this, India was put in the same league with China as far as economic data reliability is concerned. For India, this was not acceptable as this was impacting India’s sovereign rating and hence it was necessary to look deeper into the concerns raised by IMF and take corrective measures.
The major concerns that the IMF had was that India was using an outdated Base Year of 2011-12 which does not capture the modern economic structure, and that India was still using a flawed deflation method. By 1990s there was consensus among economists and international statistical organizations that use of single deflation was flawed as it introduces significant biases and double deflation method was recommended. This consensus was formalized in the System of National Accounts 1993 (SNA 1993), published jointly by the UN, IMF, World Bank, OECD, and Eurostat.
Single deflation method adjusts only the total value of output using a single price index, assuming input and output prices change at the same rate which is quite unrealistic. In contrast, double deflation method separately adjusts the value of total output and the value of intermediate inputs (raw materials and services) using two different price indices. It is rather surprising that India which was once a pioneer as far as statistical system is concerned continued with the single deflation method for so long.
Similarly, changing the base year from 2011-12 to 2022-23 was also necessary to ensure that the estimates reflect the current economic reality. Given this scenario, the Ministry of Statistics and Programme Implementation under the leadership of Dr. Saurabh Garg rose to the occasion and implemented the necessary reforms in India’s economic statistics system within a short span of time. Such efforts should be appreciated. Hopefully, IMF will upgrade India’s economic statistics and GDP in due course.
This is, as noted earlier, not say that it is perfect. So the country can engage in debates and discussions to improve it further instead of questioning the integrity of the team.
It is also important to note that it will not be easy to maintain this 7.8% growth rate throughout the year 2026-27. However, such a high rate in the first quarter gives the hope that even if the performance is not as good in the coming three quarters of the year, the overall performance in the year is likely to be reasonably good.
The author is with Council for Social Development, New Delhi
