The International Monetary Fund (IMF) has supported India’s revised method of calculating gross domestic product (GDP), describing the changes as “consistent with international best practices”. The backing comes amid a debate over whether the country’s reported economic growth accurately reflects underlying activity. India recorded real GDP growth of 7.8 per cent in the April-June quarter of financial year 2026-27 (FY27), exceeding market expectations and the Reserve Bank of India’s earlier projection.
The stronger-than-expected number sparked questions about the methodology used to measure economic expansion and the impact of revisions to historical data.
Krishna Srinivasan, Director of the IMF’s Asia and Pacific Department, said India’s updated approach aligns with recommendations made by the Fund, including guidance from its statistics department.
“These revisions to the methodology are entirely consistent with the advice we’ve been giving them, including from our statistics department,” Srinivasan said.
He also welcomed the revision of India’s GDP base year, while recognising the efforts of the Ministry of Statistics and Programme Implementation (MoSPI) to strengthen the country’s economic data systems.
Why Has The IMF Endorsed India’s Revised GDP Methodology?
India introduced a new GDP series in 2026, changing the base year from 2011-12 to 2022-23. A base year provides the reference point against which changes in economic output are measured. Periodic revisions help statistical authorities account for evolving consumption patterns, industrial activity and the changing structure of the economy.
The updated series incorporates newer data sources and methodological changes intended to improve the measurement of economic activity. One significant change relates to the calculation of manufacturing output.
The revised methodology uses double deflation, a technique that separately accounts for changes in the prices of goods produced and the costs of inputs used during production. This helps distinguish actual changes in manufacturing activity from movements caused by price fluctuations.
The ‘s endorsement supports the broad statistical approach adopted by India. However, backing for the methodology does not automatically settle every question about individual GDP estimates or rule out further improvements to the country’s economic statistics.
India’s 7.8% GDP Growth Figure Comes Under Scrutiny
The debate gained momentum after India reported 7.8 per cent real GDP growth for the first quarter of FY27. The figure was higher than the market consensus and the RBI’s earlier estimate of 7 per cent.
Former Finance Secretary SC Garg raised concerns about the latest number, arguing that downward revisions to GDP estimates for the corresponding quarter of the previous year had made the reported expansion appear stronger.
GDP growth is calculated by comparing economic output in a particular period with output during the corresponding period a year earlier. Changes to the earlier estimate can therefore influence the resulting growth rate, even when the latest quarter’s output remains unchanged.
Garg’s objections focused on the extent to which revisions to past data had affected the headline growth figure, prompting a wider discussion about the reliability and interpretation of India’s economic numbers.
Chief Economic Adviser V Anantha Nageswaran, meanwhile, criticised Garg’s approach as “cherry-picking” data. The government’s position has been that the revised series reflects improvements in measurement and the use of updated information.
The IMF’s comments strengthen the case for adopting the revised statistical framework, but two questions must be considered separately: whether the methodology follows accepted statistical practices and whether a particular quarterly growth figure accurately captures the economy’s performance.
What The IMF Says About India’s Economic Resilience
Beyond the debate over GDP calculations, the IMF has highlighted the resilience of India’s economy amid a global energy price shock. The Fund said India’s 7.8 per cent growth in the June quarter exceeded expectations among its own staff and other observers. Stronger-than-anticipated activity in services and exports contributed to the surprise.
However, higher energy prices remain a potential challenge for the economy, given India’s dependence on imported crude oil.
An increase in global oil prices can raise India’s import bill, put pressure on the rupee and contribute to domestic inflation. These effects can influence economic activity by affecting production costs, household purchasing power and the country’s external balance.
Srinivasan said India entered the energy shock with relatively strong economic fundamentals and had responded well to the challenge. He also cautioned against treating movements in the rupee as evidence of a disconnect between currency performance and economic growth.
Exchange rates respond to several variables, including international interest rates, global investor sentiment and energy prices. Currency depreciation, by itself, does not establish that a country’s GDP growth estimates are unreliable.