Government said revisions to last year’s GDP and the divergence between different price measures reflect updated data and estimation techniques rather than an attempt to artificially boost headline growth
New Delhi: Amid the criticism of India's GDP growth of 7.8 per cent in real terms in first quarter of this fiscal, the government on Wednesday defended the methodology behind its newly released economic growth estimates, saying revisions to last year’s GDP and the divergence between different price measures reflect updated data and estimation techniques rather than an attempt to artificially boost headline growth, according to the statistics ministry.
The ministry’s clarification came two days after the government released an updated series of annual and quarterly GDP estimates with 2022-23 as the base year, incorporating a new producer price index (PPI), banking services price index and additional administrative data.
The ministry's detailed questions-and-answers addressed concerns ranging from negative implicit price deflators in manufacturing to the sharp difference between nominal and real growth in mining, as well as the sizeable statistical discrepancy between production- and expenditure-side estimates.
India's economy grew 7.8 per cent in real terms in the first quarter of fiscal 2026-27, according to the revised GDP series. “A negative implicit GVA deflator for manufacturing should not be interpreted as evidence that factory-gate prices declined,” the ministry said. It said that manufacturing GVA in the June quarter was compiled using a double-deflation method, under which output and intermediate consumption are separately adjusted for price changes before real GVA is derived. “When input prices rise faster than output prices, nominal GVA can grow more slowly than real GVA, producing a negative implicit deflator even when both output and input prices are increasing,” it added.
The ministry further said that manufacturing real GVA grew 9.2 per cent in the quarter compared to nominal growth of 7.7 per cent, resulting in an implicit GVA deflator of minus 1.5 per cent. “In textiles and cotton ginning, basic metals, and rubber and plastic products among activities, the input-price growth exceeded output-price growth,” it said.
The ministry also pointed to international experience, saying negative or volatile manufacturing deflators can emerge in economies using double deflation during periods of energy and raw-material price shocks. “Agriculture presents a different case because quarterly agricultural GVA is first estimated at constant prices using production data, with current-price estimates subsequently derived using the relevant producer-price index,” it added.
