'No mechanical boost to GDP numbers': MoSPI's detailed clarification on 7.8% growth
MoSPI has explained how changes in the GDP series, price deflators, and sector-wise estimates affect the headline numbers
- Sep 2, 2026,
- Updated Sep 2, 2026 4:51 PM IST
The Ministry of Statistics and Programme Implementation (MoSPI) has clarified questions over India's 7.8% GDP growth in the April-June quarter. The ministry explained how revisions to the GDP series, price deflators, and sector-wise estimates affect the headline numbers.
The clarification came after some economists and Congress questioned the latest GDP data. The ministry said the revisions reflect changes in methodology, updated data, and the incorporation of newer indicators, rather than an attempt to make growth look stronger.
Must Read: 'No serious economist will complain': PM's advisor Sanjeev Sanyal defends India's 7.8% GDP growth
Why Manufacturing Shows Negative Inflation
One of the questions was how manufacturing could record a negative implicit GVA deflator of 1.5% when both output and input prices were rising.
The ministry said the implicit GVA deflator should not be confused with the prices of manufactured goods or inputs.
Under the double-deflation method, output and intermediate consumption are deflated separately. Real GVA is then calculated by subtracting real intermediate consumption from real output.
When input prices rise faster than output prices, nominal GVA can grow more slowly than real GVA. This can produce a negative implicit GVA deflator even when both output and input prices are increasing.
The ministry illustrated this with a hypothetical example: if nominal GVA grows 12% while real GVA grows 17.5%, the resulting implicit GVA deflator would be negative. That does not mean manufactured products have become cheaper.
In Q1 2026-27, manufacturing nominal GVA grew 7.7%, while real GVA grew 9.2%, resulting in a negative implicit GVA deflator of 1.5%.
Must Read: 'Faking GDP growth is very difficult': Arvind Panagariya explains why numbers are hard to manipulate
The ministry said input prices rose faster than output prices in activities including textiles and cotton ginning, basic metals, and rubber and plastic products. It also cited OECD research showing that countries using double deflation can see volatile or negative manufacturing deflators during global energy and raw-material shocks.
Agriculture is calculated differently. Its constant-price GVA is first estimated using production data, while current-price GVA is then derived using the relevant Producer Price Index.
The agriculture, forestry, and fishing output PPI rose about 5% in Q1, leaving the sector with an implied inflation rate of 3.9%.
Why Last Year’s GDP Was Revised
The ministry also rejected the claim that last year's current-price GDP was cut from ₹86 lakh crore to ₹80 lakh crore to make this year’s growth look better. It said the change was the result of successive revisions to the GDP series.
The Q1 2025-26 GDP estimate was initially released on August 29, 2025, under the old 2011-12 base-year series at ₹86.05 lakh crore.
In February 2026, the MoSPI introduced the new GDP series with 2022-23 as the base year. Under that series, the estimate was revised to ₹80.32 lakh crore.
It was then updated to ₹80.44 lakh crore when the provisional GDP estimates for 2025-26 were released on June 5, 2026.
Later, the new series for the Index of Industrial Production and Producer Price Index became available and were incorporated into the GDP calculations. The Q1 2025-26 estimate was subsequently revised to ₹80 lakh crore.
The ministry said the ₹86.05 lakh crore figure from the old series cannot be directly compared with the latest estimate under the revised series.
For Q1 2026-27, GDP at current prices was ₹88.27 lakh crore. The relevant comparison, it said, is with the earlier Q1 2025-26 estimate of ₹80.32 lakh crore under the same 2022-23 base-year series.
Why GDP Deflator Differs From CPI, WPI
The ministry also explained why the implied GDP inflation rate of 2.5% can differ from consumer inflation of 3.9% and wholesale inflation of more than 9%. It said the three measures cover different parts of the economy.
CPI tracks prices paid by households for a specific basket of goods and services. WPI covers bulk commodities, raw materials, and manufactured goods at the wholesale level, but excludes services.
The GDP deflator, by contrast, is derived from the ratio of GDP at current prices to GDP at constant prices and covers the entire economy. This includes government spending, corporate investment, exports, and financial and non-financial services such as banking, IT, and real estate.
The ministry said high raw-material prices and low inflation in some services can therefore pull the GDP deflator down even when consumer or wholesale inflation is much higher.
It added that more than 300 individual price deflators are used at the item or group level to compile the implicit GDP deflator.
Double Deflation Does Not Apply Directly To Consumption
The MoSPI also rejected the suggestion that the double-deflation method is directly used to calculate Private Final Consumption Expenditure, or PFCE.
Double deflation is a production-side technique used to estimate industry-level GVA at constant prices. It separately deflates gross output and intermediate consumption.
PFCE measures final demand and has no intermediate consumption to subtract.
At the quarterly level, goods such as food and manufactured products are first estimated at constant prices using volume indicators, with current-price estimates then derived using relevant CPI measures.
For services such as education, health, restaurants, and accommodation, current-price estimates use relevant output indicators, while constant-price estimates are derived using appropriate price indices.
Why Mining's Nominal And Real Growth Diverged
The ministry also explained the large gap between nominal and real GVA growth in mining.
Real GVA for mining and quarrying is calculated using the relevant IIP as the volume indicator. Mining IIP growth was -3.8% in April, -1.4% in May, and 1.6% in June, broadly consistent with the sector’s -2.4% real GVA growth in Q1.
But mineral prices rose sharply. Prices of crude petroleum and natural gas increased 69.5% in April, 72.2% in May, and 33.7% in June. Metal ore prices rose 27.6%, 25.2%, and 23.5%, respectively.
As a result, nominal mining and quarrying GVA grew 22.3% in Q1. The ministry said the gap between real and nominal growth was therefore mainly due to the sharp rise in mineral prices.
GDP Estimates Can Still Be Revised
The ministry also cautioned against reading too much into the statistical discrepancy between GDP estimates based on production and expenditure approaches.
It described the discrepancy as a statistical balancing item and said its movement alone does not show that GDP has been understated or overstated.
The Q1 2026-27 estimates are based on information available at the current stage and remain subject to revision as more comprehensive data become available.
The ministry said the discrepancy could change in subsequent revisions, but it cannot be concluded in advance that GDP will be revised upward or by any particular amount.
At the time of the final estimates at current prices, the discrepancies are expected to become very small or zero, as was the case for FY2022-23 and FY2023-24.
India's economy grew 7.8% in the April-June quarter, faster than the Reserve Bank of India's 7% forecast and up from 6.9% in the year-earlier quarter.
The Ministry of Statistics and Programme Implementation (MoSPI) has clarified questions over India's 7.8% GDP growth in the April-June quarter. The ministry explained how revisions to the GDP series, price deflators, and sector-wise estimates affect the headline numbers.
The clarification came after some economists and Congress questioned the latest GDP data. The ministry said the revisions reflect changes in methodology, updated data, and the incorporation of newer indicators, rather than an attempt to make growth look stronger.
Must Read: 'No serious economist will complain': PM's advisor Sanjeev Sanyal defends India's 7.8% GDP growth
Why Manufacturing Shows Negative Inflation
One of the questions was how manufacturing could record a negative implicit GVA deflator of 1.5% when both output and input prices were rising.
The ministry said the implicit GVA deflator should not be confused with the prices of manufactured goods or inputs.
Under the double-deflation method, output and intermediate consumption are deflated separately. Real GVA is then calculated by subtracting real intermediate consumption from real output.
When input prices rise faster than output prices, nominal GVA can grow more slowly than real GVA. This can produce a negative implicit GVA deflator even when both output and input prices are increasing.
The ministry illustrated this with a hypothetical example: if nominal GVA grows 12% while real GVA grows 17.5%, the resulting implicit GVA deflator would be negative. That does not mean manufactured products have become cheaper.
In Q1 2026-27, manufacturing nominal GVA grew 7.7%, while real GVA grew 9.2%, resulting in a negative implicit GVA deflator of 1.5%.
Must Read: 'Faking GDP growth is very difficult': Arvind Panagariya explains why numbers are hard to manipulate
The ministry said input prices rose faster than output prices in activities including textiles and cotton ginning, basic metals, and rubber and plastic products. It also cited OECD research showing that countries using double deflation can see volatile or negative manufacturing deflators during global energy and raw-material shocks.
Agriculture is calculated differently. Its constant-price GVA is first estimated using production data, while current-price GVA is then derived using the relevant Producer Price Index.
The agriculture, forestry, and fishing output PPI rose about 5% in Q1, leaving the sector with an implied inflation rate of 3.9%.
Why Last Year’s GDP Was Revised
The ministry also rejected the claim that last year's current-price GDP was cut from ₹86 lakh crore to ₹80 lakh crore to make this year’s growth look better. It said the change was the result of successive revisions to the GDP series.
The Q1 2025-26 GDP estimate was initially released on August 29, 2025, under the old 2011-12 base-year series at ₹86.05 lakh crore.
In February 2026, the MoSPI introduced the new GDP series with 2022-23 as the base year. Under that series, the estimate was revised to ₹80.32 lakh crore.
It was then updated to ₹80.44 lakh crore when the provisional GDP estimates for 2025-26 were released on June 5, 2026.
Later, the new series for the Index of Industrial Production and Producer Price Index became available and were incorporated into the GDP calculations. The Q1 2025-26 estimate was subsequently revised to ₹80 lakh crore.
The ministry said the ₹86.05 lakh crore figure from the old series cannot be directly compared with the latest estimate under the revised series.
For Q1 2026-27, GDP at current prices was ₹88.27 lakh crore. The relevant comparison, it said, is with the earlier Q1 2025-26 estimate of ₹80.32 lakh crore under the same 2022-23 base-year series.
Why GDP Deflator Differs From CPI, WPI
The ministry also explained why the implied GDP inflation rate of 2.5% can differ from consumer inflation of 3.9% and wholesale inflation of more than 9%. It said the three measures cover different parts of the economy.
CPI tracks prices paid by households for a specific basket of goods and services. WPI covers bulk commodities, raw materials, and manufactured goods at the wholesale level, but excludes services.
The GDP deflator, by contrast, is derived from the ratio of GDP at current prices to GDP at constant prices and covers the entire economy. This includes government spending, corporate investment, exports, and financial and non-financial services such as banking, IT, and real estate.
The ministry said high raw-material prices and low inflation in some services can therefore pull the GDP deflator down even when consumer or wholesale inflation is much higher.
It added that more than 300 individual price deflators are used at the item or group level to compile the implicit GDP deflator.
Double Deflation Does Not Apply Directly To Consumption
The MoSPI also rejected the suggestion that the double-deflation method is directly used to calculate Private Final Consumption Expenditure, or PFCE.
Double deflation is a production-side technique used to estimate industry-level GVA at constant prices. It separately deflates gross output and intermediate consumption.
PFCE measures final demand and has no intermediate consumption to subtract.
At the quarterly level, goods such as food and manufactured products are first estimated at constant prices using volume indicators, with current-price estimates then derived using relevant CPI measures.
For services such as education, health, restaurants, and accommodation, current-price estimates use relevant output indicators, while constant-price estimates are derived using appropriate price indices.
Why Mining's Nominal And Real Growth Diverged
The ministry also explained the large gap between nominal and real GVA growth in mining.
Real GVA for mining and quarrying is calculated using the relevant IIP as the volume indicator. Mining IIP growth was -3.8% in April, -1.4% in May, and 1.6% in June, broadly consistent with the sector’s -2.4% real GVA growth in Q1.
But mineral prices rose sharply. Prices of crude petroleum and natural gas increased 69.5% in April, 72.2% in May, and 33.7% in June. Metal ore prices rose 27.6%, 25.2%, and 23.5%, respectively.
As a result, nominal mining and quarrying GVA grew 22.3% in Q1. The ministry said the gap between real and nominal growth was therefore mainly due to the sharp rise in mineral prices.
GDP Estimates Can Still Be Revised
The ministry also cautioned against reading too much into the statistical discrepancy between GDP estimates based on production and expenditure approaches.
It described the discrepancy as a statistical balancing item and said its movement alone does not show that GDP has been understated or overstated.
The Q1 2026-27 estimates are based on information available at the current stage and remain subject to revision as more comprehensive data become available.
The ministry said the discrepancy could change in subsequent revisions, but it cannot be concluded in advance that GDP will be revised upward or by any particular amount.
At the time of the final estimates at current prices, the discrepancies are expected to become very small or zero, as was the case for FY2022-23 and FY2023-24.
India's economy grew 7.8% in the April-June quarter, faster than the Reserve Bank of India's 7% forecast and up from 6.9% in the year-earlier quarter.