GDP revisions are not manipulation, they reflect better data, says former CEA Krishnamurthy V Subramanian

India’s GDP estimates are revised as more comprehensive data become available and should not be viewed as evidence of manipulation, former Chief Economic Adviser Prof. Krishnamurthy V Subramanian said. The government, meanwhile, has issued a detailed clarification on concerns surrounding the latest GDP estimates, including manufacturing, price deflators, revisions and mining data.

Subramanian said national statistics necessarily rely on estimates and proxies because complete information on economic activity across millions of firms and households is not available when the first GDP estimate is released.

Statistical agencies therefore use the best available data, indicators and statistical techniques, with subsequent estimates incorporating more complete information.

He pointed to revisions in both directions as evidence against the argument that GDP figures are systematically manipulated. For instance, April-June 2023 growth was revised from 8.2% to 6.6%, while July-September 2024 growth was revised from 5.6% to 7.3%.

“The question, therefore, is not: ‘Why did the number change?’ The question is: ‘Do revisions display systematic bias in one direction?’” Subramanian said, arguing that the data do not show such a pattern.

Govt explains negative manufacturing deflator

The Ministry of Statistics and Programme Implementation (MoSPI), which released its clarification after publishing updated annual and quarterly GDP estimates with 2022-23 as the base year on August 31, said a negative manufacturing GVA deflator does not mean factory-gate prices fell.

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Manufacturing recorded a negative implicit GVA deflator of 1.5% in Q1 FY27, even as both output and input prices increased. The ministry said this resulted from the adoption of double deflation, under which output and intermediate consumption are deflated separately.

Manufacturing nominal GVA grew 7.7%, compared with real GVA growth of 9.2%. When input prices rise faster than output prices, nominal GVA can grow more slowly than real GVA, resulting in a negative implicit deflator.

“A negative inflation in implicit deflator in manufacturing does not mean that manufacturing prices have fallen,” the ministry said.

Why GDP inflation differs from CPI, WPI

MoSPI also explained that the 2.5% implied GDP inflation rate need not match consumer inflation of 3.9% or wholesale inflation of more than 9%, as the three measures cover different parts of the economy.

“The implicit GDP deflator need not move in line with either CPI or WPI,” it said. The GDP deflator covers the broader economy, including consumption, investment, government spending, exports and services.

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Mining prices explain real-nominal gap

The ministry attributed the sharp difference between real and nominal mining GVA to higher mineral prices. Real mining and quarrying GVA declined 2.4% in Q1 FY27, while nominal GVA grew 22.3%.

Crude petroleum and natural gas prices rose sharply during the quarter, while metal ore prices also recorded substantial inflation.

“The substantial difference between real and nominal GVA growth is primarily a result of the strong increase in mineral prices,” the ministry said.

MoSPI added that Q1 estimates remain subject to revision as more data become available, but the direction or size of future revisions “cannot be concluded in advance.”

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