The GDP conundrum: Economists split over India's faster-than-expected 7.8% GDP growth rate
India GDP growth at 7.8%: The robust growth rate has split economists, kickstarting a debate on whether the government engaged in ‘statistical gymnastics’ to boost the growth rate.
- Sep 2, 2026,
- Updated Sep 2, 2026 2:14 PM IST
India’s GDP growth rate: On Tuesday, the Ministry of Statistics and Programme Implementation (MoSPI), announced that the Indian economy grew at a faster-than-expected rate of 7.8 per cent. This exceeded Reserve Bank of India's (RBI’s) estimate of 7 per cent for the quarter.
However, the robust growth rate has split economists, kickstarting a debate on whether the government engaged in ‘statistical gymnastics’ to boost the growth rate. Why debate the numbers released by the government at all, some asked.
Krishnamurthy V Subramanian, Professor of Finance at the Indian School of Business and former Chief Economic Adviser to the Indian government spoke about it in words easily palatable for the common man: “I completely understand the common people's predicament when economists looking at the same numbers reach entirely different conclusions. Economics does involve judgment but facts cannot acquire different meanings merely because one's position has changed.”
He said one useful test is to see how one reads the economic data as compared to how they did it during their tenure with the government. "Consistency does not guarantee correctness, of course. But a complete 180-degree change, with the underlying economics unchanged, is often revealing," he said.
DON'T MISS | 'Reforms are bearing results': FM Sitharaman as GDP grows 7.8% in Q1 FY27
‘GREATLY DISTORTED’
The loudest argument came from former finance secretary Subhash Garg, who in an interview with NDTV, said that the GDP growth is actually 2.6 per cent and not 7.8 per cent, as released by the government. He said last year’s numbers have been revised down to show the current numbers in a better light.
“The current prices GDP for last year was ₹86 lakh crore, which has been revised down to ₹80 lakh crore. By revising last year's GDP by as much as ₹6 lakh crore, the current year’s GDP for the first quarter has gone up by about 10.3 per cent. If you had not revised last year’s GDP the growth in current prices would have been only 2.6 per cent. Last year’s current GDP of ₹86 lakh crore has been revised down to make this current year GDP show better,” said Garg, arguing that his statements are based on the numbers released by the government last year and this year.
Garg said there must be a thorough analysis on why the government revised down the current GDP drastically.
MUST READ | 'Doomsayers were doomed, India bloomed': PM Modi as GDP growth jumps to 7.8% in Q1 FY27
Backing him up was Kaushik Basu, Professor of Economics at Cornell University, and former Chief Economic Adviser to the Indian government, who said, “There has been a lot of discussion on India’s recent growth data. I have not studied the numbers in sufficient depth to take a stance but the best analysis I have heard is that of Subhash Garg, who, as former Finance Secretary, GOI, knows these statistics extremely well.” He also said India’s investment rate which fell from 38 per cent to 34 per cent needs attention.
The debate reached the political sphere also. Indian Overseas Congress Chairman Sam Pitroda said, "Rupee today is almost close to 100 and that is one indicator to me. Secondly, what kind of growth is that? Is that growth for very few or growth for people of India? Is it equitable? Does it percolate down, or have we created a few more billionaires? To me, this is very fundamental..."
Congress MP Jairam Ramesh called the GDP numbers ‘greatly distorted’. He said they don’t convey the “decidedly depressed private investment sentiment in the economy – both domestic and foreign”, adding that consumer confidence is very sluggish and has hit its lowest point since COVID.
‘ECONOMIC IGNORANCE’
However, another cohort of economists supported the 7.8 per cent growth rate.
Amongst them was Prof Krishnamurthy V Subramanian, who argued against Garg’s statements, calling them a “hilarious demonstration of economic ignorance on National TV”. He said comparing the nominal GDP of a year against another year is like comparing apples and oranges. Prof Subramanian said that one can’t challenge the real GDP growth of 7.8 per cent while ignoring double deflation, the constant-price estimates, and a globally accepted methodology. He further added that “historical estimates are revised precisely because new data arrive and better information becomes available”.
Member of the PM Economic Advisory Council, Sanjeev Sanyal told India Today TV that no “serious economist” is looking at this data and saying it is not credible. He said this year the base year was updated, getting rid of the old dying sectors from the basket and adding in the younger higher growth sectors. “I don't think anybody should complain. This is what we did exactly, what the IMF and others were asking us to do. No serious economist is going to complain about this. The GDP is very visibly strong and it's showing through incidentally in other areas as well. Look at car sales numbers. Those are not from the government. Corporate profitability is doing decently well. Those are not government numbers. So under the circumstances but even in any circumstance, 7.8% GDP growth rate is a very strong one.”
Sakshi Gupta, Principal Economist, HDFC Bank said the 7.8 per cent growth rate came due to upbeat domestic consumption, continued support from government spending, investments and healthy export performance. Services, financial, real estate and professional services were the standout sectors. HDFC Bank also revised its estimate for the full year to 7 per cent from 6.8 per cent.
Former part-time member of the Economic Advisory Council to the Prime Minister, Surjit Bhalla, said the current investment-to-GDP ratio is close to 28-30 per cent of GDP, which will give India a long-term basis of 6.5 per cent growth. “If you want to raise it, then you need to raise the investment rate to somewhere around 34-35 per cent of GDP in order to accelerate the rate of growth," Bhalla said, further adding that external factors also dictate investment requirements. "If global conditions are very favorable, then you may find that you can achieve a higher growth rate with a lower rate of investment. But if the global conditions are as they are now, and expected to not improve much and may even get worse, then you definitely need to step up the investment rate," Bhalla told ANI.
India’s GDP growth rate: On Tuesday, the Ministry of Statistics and Programme Implementation (MoSPI), announced that the Indian economy grew at a faster-than-expected rate of 7.8 per cent. This exceeded Reserve Bank of India's (RBI’s) estimate of 7 per cent for the quarter.
However, the robust growth rate has split economists, kickstarting a debate on whether the government engaged in ‘statistical gymnastics’ to boost the growth rate. Why debate the numbers released by the government at all, some asked.
Krishnamurthy V Subramanian, Professor of Finance at the Indian School of Business and former Chief Economic Adviser to the Indian government spoke about it in words easily palatable for the common man: “I completely understand the common people's predicament when economists looking at the same numbers reach entirely different conclusions. Economics does involve judgment but facts cannot acquire different meanings merely because one's position has changed.”
He said one useful test is to see how one reads the economic data as compared to how they did it during their tenure with the government. "Consistency does not guarantee correctness, of course. But a complete 180-degree change, with the underlying economics unchanged, is often revealing," he said.
DON'T MISS | 'Reforms are bearing results': FM Sitharaman as GDP grows 7.8% in Q1 FY27
‘GREATLY DISTORTED’
The loudest argument came from former finance secretary Subhash Garg, who in an interview with NDTV, said that the GDP growth is actually 2.6 per cent and not 7.8 per cent, as released by the government. He said last year’s numbers have been revised down to show the current numbers in a better light.
“The current prices GDP for last year was ₹86 lakh crore, which has been revised down to ₹80 lakh crore. By revising last year's GDP by as much as ₹6 lakh crore, the current year’s GDP for the first quarter has gone up by about 10.3 per cent. If you had not revised last year’s GDP the growth in current prices would have been only 2.6 per cent. Last year’s current GDP of ₹86 lakh crore has been revised down to make this current year GDP show better,” said Garg, arguing that his statements are based on the numbers released by the government last year and this year.
Garg said there must be a thorough analysis on why the government revised down the current GDP drastically.
MUST READ | 'Doomsayers were doomed, India bloomed': PM Modi as GDP growth jumps to 7.8% in Q1 FY27
Backing him up was Kaushik Basu, Professor of Economics at Cornell University, and former Chief Economic Adviser to the Indian government, who said, “There has been a lot of discussion on India’s recent growth data. I have not studied the numbers in sufficient depth to take a stance but the best analysis I have heard is that of Subhash Garg, who, as former Finance Secretary, GOI, knows these statistics extremely well.” He also said India’s investment rate which fell from 38 per cent to 34 per cent needs attention.
The debate reached the political sphere also. Indian Overseas Congress Chairman Sam Pitroda said, "Rupee today is almost close to 100 and that is one indicator to me. Secondly, what kind of growth is that? Is that growth for very few or growth for people of India? Is it equitable? Does it percolate down, or have we created a few more billionaires? To me, this is very fundamental..."
Congress MP Jairam Ramesh called the GDP numbers ‘greatly distorted’. He said they don’t convey the “decidedly depressed private investment sentiment in the economy – both domestic and foreign”, adding that consumer confidence is very sluggish and has hit its lowest point since COVID.
‘ECONOMIC IGNORANCE’
However, another cohort of economists supported the 7.8 per cent growth rate.
Amongst them was Prof Krishnamurthy V Subramanian, who argued against Garg’s statements, calling them a “hilarious demonstration of economic ignorance on National TV”. He said comparing the nominal GDP of a year against another year is like comparing apples and oranges. Prof Subramanian said that one can’t challenge the real GDP growth of 7.8 per cent while ignoring double deflation, the constant-price estimates, and a globally accepted methodology. He further added that “historical estimates are revised precisely because new data arrive and better information becomes available”.
Member of the PM Economic Advisory Council, Sanjeev Sanyal told India Today TV that no “serious economist” is looking at this data and saying it is not credible. He said this year the base year was updated, getting rid of the old dying sectors from the basket and adding in the younger higher growth sectors. “I don't think anybody should complain. This is what we did exactly, what the IMF and others were asking us to do. No serious economist is going to complain about this. The GDP is very visibly strong and it's showing through incidentally in other areas as well. Look at car sales numbers. Those are not from the government. Corporate profitability is doing decently well. Those are not government numbers. So under the circumstances but even in any circumstance, 7.8% GDP growth rate is a very strong one.”
Sakshi Gupta, Principal Economist, HDFC Bank said the 7.8 per cent growth rate came due to upbeat domestic consumption, continued support from government spending, investments and healthy export performance. Services, financial, real estate and professional services were the standout sectors. HDFC Bank also revised its estimate for the full year to 7 per cent from 6.8 per cent.
Former part-time member of the Economic Advisory Council to the Prime Minister, Surjit Bhalla, said the current investment-to-GDP ratio is close to 28-30 per cent of GDP, which will give India a long-term basis of 6.5 per cent growth. “If you want to raise it, then you need to raise the investment rate to somewhere around 34-35 per cent of GDP in order to accelerate the rate of growth," Bhalla said, further adding that external factors also dictate investment requirements. "If global conditions are very favorable, then you may find that you can achieve a higher growth rate with a lower rate of investment. But if the global conditions are as they are now, and expected to not improve much and may even get worse, then you definitely need to step up the investment rate," Bhalla told ANI.