Ex-IMF economist Surjit Bhalla backs 7.8% GDP number: 'No evidence of exaggeration'

Economist and former IMF executive director Surjit Bhalla has rejected allegations that India’s GDP growth figures were politically manipulated, saying there is “no evidence” that the government exaggerated the numbers. His comments came amid a heated debate over the latest 7.8% first-quarter GDP growth estimate and the downward revision of earlier data.

Speaking on Rajdeep Sardesai’s Roundtable on GDP numbers on India Today TV, Bhalla said he had specifically examined whether the changes in the national accounts series were aimed at boosting the reported growth rate. He said his assessment found no evidence that the government had “played politics with the numbers”.

“I’ve made a solid attempt… to look at that as to are we boosting up our growth rate? Are we playing politics with the GDP numbers?” Bhalla said. “And I come out squarely that there is no evidence to date that we have played politics with the numbers.”

Asked specifically whether there was any political influence behind the downward revision, Bhalla was unequivocal: “Absolutely no politics.” He added that those involved in constructing India’s national accounts were “some of the most conservative economists and statisticians that I’ve met.”

Artificially boosted GDP?

Bhalla also challenged the argument that the government could have artificially boosted GDP.

“Let us say we were trying to boost up the GDP. That’s basically what it comes to,” he said, before questioning why a government seeking to inflate growth would not boost consumption, which he described as difficult to measure.

Instead, Bhalla pointed out, “we have got consumption at a lower rate than what was there in the old data.” He also cited the increase in investment, saying there was “a lot of corresponding data” showing that investment had increased.

“This is private sector data,” Bhalla said, adding that agencies had “gone out of the way to document that there has been a large increase in investment, and investment adds to GDP.”

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He further pointed to imports and import prices.

“Imports are a drag on GDP,” Bhalla said. He added that if import prices rise, the implied GDP, particularly in manufacturing where many imports come in, can also be boosted.

“There’s no evidence that this is…,” Bhalla said before concluding that while there were questions that could be asked, “there’s no evidence that the data was exaggerated.”

The GDP debate

Neelkanth Mishra said the revisions needed to be viewed in the context of changes to India’s national accounts methodology and data.

“Economies that grow fast and have a very large informal component, every five years you have to go and reset that,” Mishra said, noting that India had not reset the series for 10 years. He said the process brings in new information and, consequently, “overall GDP numbers get revised up or down.”

Mishra cautioned against comparing figures from different series.

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“You cannot compare old series data with new series data because not only is the methodology very different, the input data itself is different,” he said. “So, it has to be like-to-like, otherwise it doesn’t make sense.”

He also pointed to the fact that nominal GDP had been revised down by 4% under the new series.

“That created problems for the government because they have taken on a debt to GDP target,” Mishra said. “Why would the government go about doing that?” He added that the statistics department works on the basis of data and frameworks and that such revisions are routine internationally.

Downward revision of FY26 GDP

Former Planning Commission deputy chairman Montek Singh Ahluwalia agreed that the alternative 2.8% growth calculation was not a valid way to assess the economy when different data series are mixed. But he cautioned against drawing sweeping conclusions from quarterly numbers.

“All quarterly numbers have to be taken with a pinch of salt. They’re based on preliminary information. You cannot decide based on the first quarter what the growth rate for the year as a whole will be,” Ahluwalia said.

Ahluwalia nevertheless said the downward revision of GDP when the statistical base is changed was a legitimate question that warranted closer examination.

“Whether they should have gone up or gone down or gone down as much as they have, that is a relevant question,” he said. He added that once the statistics authorities released the full details, “economists and others interested in this issue will look at it carefully” to understand the technical reasons for the revision.

Bhalla, however, maintained that while questions about the methodology and revisions were legitimate, the evidence available so far did not support the claim that India’s GDP data had been politically exaggerated.

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