GDP: Opinions, facts and the ‘confidence’ in India

India's latest GDP numbers, more particularly for Q1, 2026, have produced a rather unusual debate. The economy grew by a robust 7.8% in the first quarter of 2026-27, comfortably ahead of the RBI's 7% forecast and market expectations. Yet a former Finance Secretary questioned the numbers and arrived at a growth rate of just 2.8%. But his methodology and the conclusion have been strongly contested. Not one has supported his maths.

The 2.8% conclusion is fundamentally flawed. The comparison of numbers from different statistical series and units is not valid. As one former Chief Economic Adviser amusingly put it, what the former Finance Secretary has done is similar to “ comparing his weight recorded in June 2025 in pounds against his weight in kilograms recorded in June 2026 to conclude that he has lost weight”.

For a start, lets keep the 7.8% in focus and consider some corroborative or proxy high frequency figures cited below.

Passenger vehicle sales touched a record ₹12.74 lakh units in the first quarter, while two-wheelers crossed ₹56 lakh. Tractor sales also showed strong growth, suggesting that rural demand has not been particularly weak. Bank credit growth accelerated sharply, with agriculture and SME lending growing even faster in SBI's portfolio, a bell weather for national economic activity.

My young friend Raul Rebello, MD and CEO of Mahindra Finance, an authentic voice, tells me that the vehicle sales is retail and not manufacturers’ despatch data, reflecting ground level reality.

Yes, these are not substitutes for GDP estimates. Tractor sales is not GDP. Bank credit is not GDP. But they are useful indicators.

Government finances provide another supporting piece of evidence. Total receipts of the Union Government in the first quarter rose from ₹9.41 lakh crore to ₹10.49 lakh crore, an increase of 11.46%. This corresponds to the nominal GDP growth estimated now. The Government revenue receipt is not accrual, it is cash: actual received.

There is, however, one number that should make us pause before we conclude our assessment of the economy — GST.

Gross GST collections during Q1 this FY rose 8.4% to ₹6.32 lakh crore. Yet, domestic GST collections were only around ₹4.54 lakh crore — implying growth of roughly 2.8%. Import-related GST, in contrast, grew by more than 26%.

Therefore the apparently healthier headline GST growth of 8.4% is therefore substantially supported more by imports. This does not prove that GDP growth is 2.8%. GST is not GDP. But the divergence deserves a relook and a clarification.

This brings us also to the larger issue — the methodology underlying our national accounts.

As already known, the Government has changed the base year to 2022-23 and introduced important methodological changes, including more granular price data and a shift from WPI towards the Producer Price Index for relevant components.

There is nothing wrong with improving statistical methodology. Indeed, it is essential. But the MoSPI should put the components, weights, deflators and parameters used in calculating GDP, GVA and the relevant price indices in the public domain.

If the numbers withstand scrutiny, their credibility will only increase.

Critics too have a responsibility. Questioning official data is legitimate and necessary in a democracy. But creating confusion about its credibility merely through commentary and patently wrong comparisons does the economy no good. It is very easy to spread gloom and doom; it is much harder to establish with evidence that the official numbers are wrong. I have for reference an article in a daily written by Kerala-based economists, where they cast the growth claim in questionable light by stating that unemployment and inflation are high. If there is GDP growth, does any theory state that there has to be validation through reduction in inflation or unemployment ? Such attempts from very respected voices add to the confusion.

Great care is required in commentaries. Ours is a unique experiment in history. A "poor" nation chose democracy at Independence, with the unparalleled principle of one person, one vote. Today, India is a “developing” economy (yes, with low per capita GDP) aspiring to become a developed nation by 2047. Whatever one's political preferences, that journey requires the “trust”, “hope” and “confidence” of all agents of economic activity, including those at the pyramid’s bottom.

Those of us in comfortable surroundings — commentators, economists and political observers alike — may not immediately suffer when hope, trust and confidence are eroded or undermined through “narratives” and “opinion pieces”. In any case, we will continue to have our air-conditioned comfort at home and in the office and newspaper space for our views and opinions. But if the “trust” pillar is weakened, its consequences will hit the poor the hardest.

So, question Government data by all means. But unless there is valid evidence to disprove the official data, please hold your fire, do not resort to sophistry.

What should the Government do? Dig deeper into the divergence between the GDP numbers and other indicators of economic activity, especially the GST number, using the figures at the end of June 2026. We are discussing only that now. That would be far more useful than merely dismissing the criticism and trying to run down the critics.

Anyway, data validation will be useful for the Government. I am sure the “Establishment” will have great regard for the voters of Uttar Pradesh, going back to 1977. UP voters will have their say in the Assembly elections of 2027. GDP, inflation, employment, exports, incomes and consumption will ultimately be reflected in the lived experience of about 22 crore people, and they will throw their lived data at the “Establishment”. Please don’t wait until smart “UP bhaiyyas” tell you, through their vote, what was actually wrong with your statistics. I for one, "hope" the figures are credible.