Beyond the 7.8% Headline: Why India’s Data Quality Matters More Than Growth Statistics
India has ambitious goals for economic growth over the next two decades, and this has made its growth numbers the centre of considerable attention. The recent growth figure of 7.8% for April-June 2026 (versus the same quarter last year) was higher than expected, and it also was questioned more than usual. India’s national accounts statistics and growth figures have been scrutinised for at least the last decade, with concerns about the reliability and quality of the data.
In the latest case, there were discussions that were of a similar technical nature to those in the past, involving collection and estimation methods for the raw data, methods for adjusting for inflation, and so on. Whereas several academics have been expressing concern about India’s growth numbers, including former Chief Economic Adviser Arvind Subramanian, this time a former senior civil servant joined the critics, and offered an alternative growth estimate of 2.6%, a number so low as to be shocking.
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While the calculation behind that alternative is itself flawed, the controversy became more heated, and explanations that were not confined to academic articles proliferated. Calculating a country’s gross domestic product (GDP), the basis of any growth numbers, is an enormously complicated exercise. It involves surveying large numbers of producers, extrapolating where direct numbers are not available, and aggregating a range of different estimates. Quantities have to be converted to values, using appropriate prices, and then adjusted for changes in the general price level, that is the rate of inflation.
This latter estimation can be done in several ways, since the weights used to calculate a price index — essentially a weighted average — can be subject to choice and can change over time. Typically, the change in GDP is calculated using current prices, which gives the nominal rate of GDP growth, and then this is adjusted for changes in the price level, yielding the number of interest — real GDP growth. Real growth is what matters, since nominal growth does not reflect actual increases in the goods and services available to the population.
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Periodically, the base year for calculating inflation is changed, at which point the weights are updated to better reflect what is actually being produced. This has happened recently, affecting the latest numbers. When such changes are made, older figures are revised to conform, but that process has not been completed, so there is a half-finished story here. In the current period, the deflation method was also changed, using separate indices for adjusting the prices of outputs and inputs. This seems to be an innovation for India’s national income accounting, and has been recommended by statistical experts, but again the impacts of these changes on older growth numbers have yet to be fully worked out.
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So, what should we make of all the controversy and their technical underpinnings? One will have to wait and see how the revisions play out once they are completed. Perhaps a more basic concern is that the quality of collection of the raw data has been increasingly questioned. In the 1950s, led by the eminent statistician PC Mahalanobis, India created a national accounts system that was the envy of developing nations. Over time, as the economy has grown and become more complex, data collection has not kept up. Currently, the International Monetary Fund gives India’s national accounts statistics a grade of only “C”.
Sometimes, nations are accused of manipulating national accounts statistics and growth figures to make the economy look good, in order to impress voters or investors. Those efforts can last for a long time, but ultimately fall apart, as the statistics diverge further and further from reality as experienced by firms and consumers. My impression is that such biases are minor in the Indian case. Some of the problems have come about from a lack of transparency with respect to methods and the raw data, but it does seem that India is growing fast. Of course, even a small overestimation of growth rates will compound over time. On the other hand, if growth rate estimation errors fluctuate in both directions, discrepancies will even out over time. The current growth rate estimate may be “too high”. This may be the result of an earlier overestimate of post-Covid growth, which may end up being revised downward. We will have to wait for the entire revision process to be completed to know how India has been doing in reality.
Improvements in methodology and adjustments for the changing structure of the economy are ultimately good things. Concerns should be focused, instead, on the quality of the raw data, and making sure that this collection is done as well and as comprehensively as possible.
While the focus is on national-level statistics, there should also be greater attention to the collection of state-level data, which is often of much lower quality. Even local governments, especially urban governments, would benefit from doing a better job of data collection. Ultimately, all this data about the level of economic activity is not just about being able to boast of a high growth rate. High-quality, detailed data is vital for good policymaking, and that ultimately matters for how well the economy does. The path from good data to good policymaking to high growth needs attention, not just the accounting that happens after the game has been played.
Disclaimer: The views expressed are the author’s own and do not reflect the official policy or position of Financial Express.
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This article was first uploaded on September twenty, twenty twenty-six, at eleven minutes past seven in the evening.
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