Mind the gaps: Why India's GDP measurement requires a reset

Next year's base revision offers us a chance to improve data accuracy and five reform measures should help achieve that goal

- ASHISH KUMAR & KUNTALA KARKUN

Each release of data on gross domestic product (GDP) in India follows a familiar script: an initial wave of headline enthusiasm, followed by doubts about manufacturing strength, real-nominal gaps and statistical discrepancies.

But these debates miss a key point. India's core methodology for GDP estimation is broadly sound and internationally aligned; the real weakness lies in the broader statistical ecosystem-data sets that haven't kept up with structural shifts, outdated reconciliation tools and price measures that struggle to reflect fast-changing production and consumption. The result is an over-interpretation of the headline number without the context needed to read it properly. Unless we modernize this architecture, we will keep debating symptoms rather than the underlying issues that matter for interpreting GDP data in a rapidly evolving economy.

Two core indicators, manufacturing gross value added (GVA) and the Index of Industrial Production (IIP), often seem to diverge. This isn't a contradiction, but a feature of the system. About 80% of manufacturing GVA comes from the organized corporate sector, estimated from quarterly filings of roughly 1,500 firms that report sales, input costs and operating expenses. This aligns with global practice and recent data shows solid momentum: corporate manufacturing has been growing 10-20% this year, with earnings before interest, taxes, depreciation and amortization rising by about 9.6%.