The unending saga of India’s GDP data

In most countries, gross domestic product (GDP) data releases are routine. In India, they spark controversy. A decade after the new GDP series was introduced, questions about its credibility remain, leaving both analysts and policymakers unsure about the economy’strue health.

- RAJESWARI SENGUPTA

According to the latest data release, the economy grewatastaggering7.8 percent rate in the April-June quarter of 2025-26, far above forecasts made by economists based on all the other available data. Unsurprisingly, the release has reignited a wave of scepticism and debate.

There are several issues with the GDP series.

The first problem concerns nominal GDP. For organised manufacturing and services, the National Statistical Office (NSO) relies heavily on firms’ financial filingswith the Ministry of Corporate Affairs (MCA), collating data from firms that file regularly, andscalingupthosenumbersto takeaccountofthe firms that haven'tfiled. However, many non-filing firms are defunct, loss-making, or mere shell companies that do not produce anything ona regular basis, but serve as conduits to hide profits or circumvent regulations. In such cases, inflating the data from filing firms tocover non-filers risks overstating GDP.

ANational Sample Survey Office (NSSO) survey of these MCA firms, conducted in 2016-17, found that nearly a quarter of the 35,000 firms surveyed either refused to share data, had shut down, or were untraceable. Its 2019 report confirmed major gaps in the pool of non-filing firms. Yet these firms continue to be included in GDP estimation. This implies that India’s nominal GDP suffers from measurement issues that can worsen dependingon which firmsare sampled in agiven quarter.