GDP Deflator Debate: Input Costs Surge, But Factory Prices Stay Flat | What It Means For GDP

Why can factory-gate prices turn negative when inflation remains elevated? Dr. Saurabh Garg, Secretary, MoSPI explains the manufacturing GDP puzzle and the role of the deflator. He says rising input costs for materials such as steel, plastics and composites have not been fully passed on to consumers, keeping output prices relatively flat. This creates a sharp difference between current-price and constant-price value addition, resulting in a negative manufacturing deflator. Garg also addresses the question of future GDP revisions. As more corporate results and government data become available, revisions can continue, but he expects these to generally remain modest, around 10 - 30 basis points. He says the latest base-year revision has already incorporated major structural and data changes, while smaller updates will continue as fresh information comes in.