By Santosh Kumar Mohapatra
India’s reported 7.8 per cent real GDP growth in the April–June quarter of 2026 has triggered debate over how fast the economy is growing and how that growth is being measured. Nominal GDP grew by 10.3 per cent while real GDP grew by 7.8 per cent, implying a GDP price deflator of roughly 2.5 per cent. This is below CPI inflation of about 3.9 per cent and WPI inflation of more than 9 per cent. Although these are conceptually different measures, the divergence deserves scrutiny.
The Government has explained that the GDP deflator is derived from more than 300 individual price deflators and need not move in line with CPI or WPI. Former Chief Economic Adviser Arvind Subramanian has highlighted concerns about unusually low implicit GDP deflators and their potential effect on measured real growth. A low deflator is not necessarily wrong; it can arise from changes in relative prices and production composition. The key question is whether it accurately represents price movements and whether the underlying data are sufficiently transparent for independent assessment.
India introduced the GDP series with 2011–12 as the base year in January 2015, replacing the previous 2004–05 base year. The debate makes it legitimate to ask whether the construction of deflators, their weights and new price indices have materially affected measured real growth.
According to the revised national accounts, nominal GDP for 2025–26 is Rs 345.47 lakh crore, compared with Rs 357.1 lakh crore in the First Advance Estimate under the old 2011–12 series. The revised estimate is lower by about Rs 11.63 lakh crore, or roughly 3.3 per cent.
These revisions should not be described as a cumulative “loss” of GDP. But the estimated size of the economy is consistently lower by roughly 3–4 per cent. If the nominal size of the economy has become substantially smaller after revision, how should we interpret the high real growth rate? Lower nominal GDP also affects fiscal ratios such as the fiscal deficit-to-GDP and debt-to-GDP ratios.
The more disturbing issue is the GDP estimate for April–June 2025. The old-series nominal GDP estimate was Rs 86.05 lakh crore. Under the new 2022–23 series, it was revised to Rs 80.00 lakh crore—approximately Rs 6.05 lakh crore, or 7 per cent, lower. Former Finance Secretary Subhash Chandra Garg has questioned this discrepancy. Why was the estimate revised downward so sharply, what sectors account for the change, and how can independent researchers verify the calculations?
Another issue concerns real GDP. Under the old 2011–12 series, real GDP in April–June 2025 was estimated at Rs 47.89 lakh crore; under the new 2022–23 series, it is Rs 75.46 lakh crore. These figures cannot be directly compared because they use different price bases. The difference is not, by itself, proof of wrong methodology, but raises questions about the magnitude and composition of the revisions.
The GDP deflator may not be the villain. But when a relatively low deflator converts moderate nominal expansion into high real growth, while the economy simultaneously witnesses large downward revisions in its nominal size, the deflator becomes an area of investigation.
The divergence between nominal and real growth deserves careful scrutiny.
Moreover, a rise in GDP does not automatically translate into employment, better quality of life or reduced debt. Job creation remains a concern; inequality and household debt have grown; and health, education, social security and environmental quality are not adequately reflected in GDP.
GDP is an important measure of economic production, but not a comprehensive measure of human welfare. A country can record high GDP growth while large sections of its population face unemployment, insecure work, indebtedness, unequal access to healthcare and education, and environmental deterioration.
The larger question is whether GDP numbers accurately capture the real expansion of productive activity and whether that expansion is translating into better lives for ordinary citizens.
The author is an Odisha-based economist and columnist.