Understanding GDP Revisions: India's Case and Vietnam's Precedent
Economist Sriram Balasubramanian has dismissed claims that India's recent 7.8% GDP growth for the April-June quarter was overstated. While acknowledging legitimate questions about a roughly 7% revision in the data, he highlighted that such adjustments are not uncommon, citing Vietnam's substantial 25% upward adjustment to its 2019 GDP figures.
The Context of India's GDP Data Controversy
The Ministry of Statistics and Programme Implementation (MoSPI) reported India's real GDP growth at 7.8% for April-June 2026. However, under a new series with 2022-23 as the base year, the April-June 2025 estimate was revised down significantly from Rs 86.1 lakh crore (under the old 2011-12 base) to Rs 80.3 lakh crore. This prompted former Finance Secretary Subhash Garg to question the pattern of downward revisions, suggesting it could artificially inflate current growth rates.
Why Revisions Occur: The Vietnam Example
Balasubramanian explained that rebasing national accounts often leads to such revisions as economies adapt to new data and structural changes. He specifically mentioned Vietnam's 2019 experience, where its GDP was revised upwards by approximately 25%. This serves as a strong precedent for countries updating their economic measurement methodologies, indicating that such large adjustments are part of a normal statistical process.
Key Drivers of India's Revision
A significant portion of India's revision, Balasubramanian noted, stemmed from the "trade, repair services, hotels, and restaurants" segment. This sector, characterized by its dynamic nature and prevalence of private-sector involvement, can undergo substantial structural changes over a decade, significantly impacting GDP calculations during rebasing. He suggested that excluding this segment would make the overall revision considerably smaller.
Addressing Criticisms on the Informal Sector and Double Deflator
Balasubramanian also countered arguments regarding an overestimation of India's informal sector. While some critics suggested an overestimation of around 22%, a comparison between NAS 2026 and NAS 2025 data showed a much smaller difference of 3.34-3.7%.
Furthermore, he defended the use of the double-deflator approach in the new GDP series, a method recommended by the IMF that accounts for price changes in both inputs and outputs. He questioned why some critics who previously advocated for this approach are now opposing it, emphasizing its statistical validity.
Data Integrity and Economic Direction
Concluding his remarks, Balasubramanian asserted that MoSPI has made concerted efforts to resolve prior data issues in the updated versions of national accounts. While academic debates on whether India should use a single or double deflator are valid, he strongly rejected accusations of manipulation or questioning the integrity of authorities, stating that the current trend lines and other macro indicators point towards a correct economic direction.