‘Intellectual poseurs peddling rancorous story’: SBI Ecowrap defends 7.8% GDP growth

India 7.8% GDP growth rate: The claim of the “missing ₹6 lakh crore” is a rancorous story peddled by “some Intellectual poseurs, bordering charlatanism”, said SBI Ecowrap in their latest research report. The report was referring to former finance secretary Subhash Garg’s statements that the current prices GDP last year was ₹86 lakh crore, which was revised down to ₹80 lakh crore, boosting the GDP growth rate to 7.8 per cent, instead of the 2.6 per cent which it should be.

“Some stories are seeped in facts, while some are entirely fictional, a loose figment of irrational tit-bits of imagination stitched haphazardly. The rancorous story being peddled by some intellectual poseurs, bordering charlatanism, notably that of the ‘missing’ ₹6 lakh crore / ₹42 lakh crore in Nominal GDP during Q1 FY26/ Q1FY23-Q2 FY26, is a badly scripted piece of fiction devoid of any logic,” stated SBI Research, calling the claims frivolous and a sure sign of intellectual dishonesty.

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The report sought to clarify some of the concerns and the claims on India’s GDP growth:

The revisions: The report stated that India has had base year revisions in FY05, FY12 and most recently FY23. There have been 239 revisions over 70 quarters, out of which 134 has been in upward direction and 105 in downward direction. It said the extent of revisions is random and has no set pattern, meaning that like the downward revision done from last year, the revision could very well have been upward.

The report also stated that in terms of nominal GDP, 14 quarters from FY23 Q1 to FY26 Q2 saw ₹41.8 crore in revision, while the 56 quarters preceding FY23 Q1 revealed a revision of a lesser magnitude of ₹10.1 lakh crore.

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The methodology: It is not only about the new methodology but also about the sectoral composition, said the report. “95% of the revision is largely concentrated in Trade, Hotels, Transport and Communication (−₹39 lakh crore), while Finance, Insurance, Real Estate and Business Services record a positive revision of ₹13.6 lakh crore. The contrasting movement can therefore be viewed as a significantly better mapping of the composition of economic activity across informal/unincorporated sectors,” the report added.

The ASUSE and PLFS information provides a more refined measurement, which was absent in earlier base year changes. The report cited the example of FY17 that it said, “reveal the shortcomings of the earlier GDP methodology in not being able to capture movements in GDP in times of policy changes”.

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“We believe that the large decline in nominal and the large increase in real GDP in the new GDP series indicate the enhancement of the purchasing power of the people as overall price levels dropped faster than the physical output of the economy grew. This also means availability of same goods at lesser prices,” it said.

Public data: “Our exercise demonstrates that the required information is, in fact, sufficiently available to construct reasonable proxies consistent with the underlying methodology and is in direct contrast to the commentary in public domain by noted economists who have held respectable Government positions previously,” said SBI Research, without naming Garg. It said their exercises showed a 3.7 per cent GVA deflator against MoSPI’s estimate of 3 per cent, which, it said, are closely aligned.

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Leading indicators: It said that there is sufficient evidence to show that GDP growth has consistently been at more than 7 per cent since FY23. If the underlying GDP growth was indeed substantially low, then the performance of key high-frequency indicators would be difficult to reconcile.

“Let us end with a Bayesian analogy. People hear not merely what is said, but what their prior beliefs   permit them to hear. Like perfect Bayesians with dogmatic priors, they assign inconvenient possibilities  (often realities) a probability of zero. So no amount of new evidence can revive them. Their expectations  then shape their behaviour, producing the very outcomes they anticipated. Hard facts arrive, but instead of updating their beliefs, they reinterpret the facts until the world once again resembles what they already believed,” it said.

SBI Research said casting doubts on the GDP data is akin to casting doubts on the qualifications and integrity of the galaxy of experts that constituted the committees.

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