Credibility Crisis in India’s Economic Statistics
Context
Recent 8.2 percent real GDP growth in Q2 FY 2025–26 and the IMF’s “C” grade to India’s national accounts have renewed concerns about the reliability of India’s economic data and its implications for policy and governance.
Key Challenges
Outdated GDP Base Year
- 2011–12 remains the base year for GDP estimates, making it structurally outdated
- New 2022–23 base series scheduled for 2026
- Distorts real growth and inflation measurement
Delayed Price Index Revisions
Consumer Price Index and Wholesale Price Index
- CPI and WPI baskets are overdue for five-yearly revision
- Narrow gap between nominal and real GDP growth indicates possible inflation understatement
- High growth figures should be treated as indicative
Inappropriate Price Architecture
Services-Dominated Economy
- Services contribute about 55 percent of GVA
- GDP deflation relies heavily on WPI, which excludes most services
- Absence of Producer Price Index cited by IMF as key weakness
Weak Coverage of Informal Economy
Measurement Issues
- Informal sector contributes nearly 45 percent of GDP
- Not measured annually through direct surveys
- Proxying informal activity using formal-sector data misrepresents shocks such as demonetisation, GST and the pandemic
Breaks in Core Surveys and Census
Data Continuity Issues
- Decennial Census series since 1881 disrupted
- Consumption Expenditure Survey last released in 2011–12
- Weakens poverty, inequality and CPI reweighting estimates
Lack of Seasonally Adjusted Data
Interpretation Challenges
- Quarterly GDP published without seasonal adjustment
- Monsoon and festival effects blur real economic trends
- Limits effective policy and investment decisions
Reform Agenda
Institutional Strengthening
- Treat statistics as economic infrastructure
- Provide statutory autonomy to National Statistical Commission
- Protect data publication from political interference
Ensuring Periodicity and Transparency
- Legislated timelines for Census and key surveys
- Regular release of anonymised microdata for validation
- Transparent integration of digital data sources such as GST and UPI
Conclusion
India’s growth trajectory is strong, but data credibility is essential for sound policymaking.
If reforms like the new GDP base year, updated CPI weights and revised indices in 2026 are institutionalised, India’s statistical system can align with global best practices and ensure confidence in growth estimates.
Source : The Hindu