India’s headline GDP growth of 7.8% in the April-June quarter has come under scrutiny after questions were raised over changes in the statistical base used to calculate growth and major revisions to earlier GDP figures.
Former Finance and Economic Affairs Secretary Subhash Chandra Garg said the 7.8% figure appears strong on the surface, but he believes the changes introduced under the new GDP series make it difficult to directly assess how fast economic activity actually grew.
Garg said the issue needs closer examination, particularly because the comparison is now being made against a revised figure for the same quarter of the previous year.
Garg questions the comparison base
Garg said the real GDP figure for the first quarter of the previous financial year was originally released under the old GDP series. However, the corresponding figure under the new series is now being used as the base for calculating growth for Q1 of 2026-27.
Garg said this change makes a straightforward comparison difficult.
He was quoted as saying that the 7.8% growth rate looks very good “on the face of it”, but the revised base means the figure should be examined carefully.
According to Garg, comparing the latest growth figure with the revised base should be taken with “a little bit of a pinch of salt.”
He said a better way to examine the situation would be to also look at GDP growth at current prices, rather than focusing only on the headline real GDP growth rate.
Sharp revision in current-price GDP
Garg also pointed to what he described as a significant revision in the current-price GDP figure for Q1 of 2025-26.
According to Garg, the revised government data now puts nominal GDP growth for that quarter at 10.3%.
However, Garg said that if the current-price GDP figures released last year had been used instead, the nominal growth rate would have been less than 2.5%.
Garg said this difference is substantial because the nominal GDP growth rate changes sharply depending on whether the revised figure or the figure originally released is used as the comparison base.
For Garg, the combination of the revised base and the major change in current-price GDP raises questions about whether the 7.8% headline growth rate fully reflects actual economic activity.
He said these two factors give him “a little bit of a doubt” about whether the 7.8% figure is genuine.
Why Garg says the new GDP series needs closer examination
In another interview, Garg acknowledged that revisions are expected when a new GDP series is introduced.
Garg explained that a new series can include new products and companies, while some products or companies that were counted under the earlier series may no longer be included.
Such changes can naturally affect the measured value of production, he said.
Garg said there is no problem if a change in the methodology or coverage results in a different production value. His concern, he was quoted as saying, is the scale of the revision and the lack of a clear explanation for such a large change.
He said that if the new series results in a significant reduction in the GDP figure, there should be clarity about what exactly changed and why.
Around ₹12 lakh crore reduction cited
Garg pointed to what he described as a particularly large revision in GDP at current prices.
According to Garg, GDP for 2023-24 was reduced by around ₹12 lakh crore after the shift to the new GDP series.
He said such a substantial reduction needs to be explained clearly so that the changes between the old and new series can be properly understood.
Garg also pointed to revisions across different components of GDP.
He said agriculture and mining figures have increased, while the figure for manufacturing has been reduced significantly.
He also highlighted changes in investment expenditure and consumption, saying that consumption had been “drastically reduced.”
Debate over what the 7.8% figure means
Garg said the various changes make it important to understand exactly what has changed between the old and new GDP series before drawing conclusions from the latest growth number.
The 7.8% GDP growth recorded for the April-June quarter has therefore become the focus of a wider debate over the impact of the new GDP series and the revisions made to previous-year data.
Garg’s central concern is not simply that the GDP series has been changed. He said revisions are expected when a new series is introduced. Rather, he is questioning the scale of the revisions, the revised comparison base and the need for greater clarity about the changes in the underlying GDP components.
According to Garg, these factors need to be examined carefully before the 7.8% growth figure is taken as a straightforward measure of the pace of economic activity.
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