India overhauls GDP data calculation to improve accuracy
It is adopting more granular price deflation to address concerns raised by economists that its method is outdated
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[NEW DELHI] India will overhaul the way it calculates real gross domestic product growth under a revised national accounts series launching on Friday (Feb 27), the country’s top statistical official said.
It is adopting more granular price deflation to address concerns raised by economists.
India measures real GDP – which adjusts for inflation – by deflating nominal GDP growth using price indexes.
Economists have raised concerns that the method is outdated, as it has a greater reliance on the wholesale price index (WPI) and not the more closely tracked consumer price index (CPI).
Saurabh Garg, the secretary for the Ministry of Statistics and Programme Implementation, said: “We will now use about 500 to 600 items from the new CPI and the old WPI series, compared with about 180 earlier, to deflate the output and improve the accuracy of the data.”
He added that this practice will continue until a revised WPI series is released, which is expected shortly.
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Under previous methods, discrepancies arose because low nominal GDP growth alongside low wholesale inflation translated into higher real growth rates.
Based on the old series, India’s economy – among the fastest-growing major economies in the world – is estimated to expand by 7.4 per cent in 2025/26 against a growth rate of 6.5 per cent in 2024/25.
Nominal GDP – which reflects output measured at the current market prices – is estimated to grow 8 per cent in 2026.
A new GDP series with a 2022/23 base year will be released on Feb 27, along with back-series data for the previous four years.
Statistical overhaul
The changes are part of a broader revamp of India’s statistics, following the release of a new retail inflation series earlier in February. Revisions to wholesale inflation and industrial output are also underway.
In November, the International Monetary Fund (IMF) raised concerns over weaknesses in India’s national accounts methodology.
The IMF cited the outdated 2011/12 base year, the methodology’s reliance on wholesale prices and its extensive use of single deflation. It assigned the framework a C rating.
At the core of the overhaul is the shift to double deflation, which separately adjusts output and input prices to measure the real value added.
Garg said the reforms will improve accuracy, particularly in the manufacturing sector, where diverging input and output prices had raised concerns about bias under the earlier single-deflation method. REUTERS
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