New GDP series shows India's GDP growth more broad-based: Economists

India's economy remains stable and growth is now more broad-based, top economists said on Saturday. At the same time, there was also a debate whether some incentives were perhaps needed to boost deposits at banks, which after all were funding the economy, whether it was for large infrastructure projects or loans to small enterprises. 

"The last three years the average growth rate is 7.3 per cent. This is actually remarkable. Also, contrary to the popular perception, this growth is driven by manufacturing improvement," noted Soumya Kanti Ghosh, group chief economic advisor at State Bank of India.

The government this week introduced a new GDP series with 2022-23 as the base year, replacing the earlier 2011-12 base year.

Under the new series, India's GDP growth in the October-December quarter has been estimated at 7.8 per cent. Growth for the full 2025-26 financial year has been estimated at 7.6 per cent as per the second advanced estimates.

Noted Economist Ashima Goyal, a former member of the Reserve Bank of India's monetary policy committee (MPC) says the new GDP shows the diversity of the economy.

"It shows that manufacturing has been doing well, investment has been doing well, farmer incomes have gone up," Goyal stated.

Speaking at the BT Banking and Economy Summit at the National Stock Exchange in Mumbai, Goyal stressed that India's data was credible and there had been a careful evaluation.

In the past, there has been a criticism that India's GDP data doesn't paint a completely realistic picture. Last year, the International Monetary Fund (IMF) had assigned a 'C' grade to India's National Accounts Stastics, indicating shortcomings that somewhat hamper surveillance.

Does the new GDP series address the critics concerns?

"Improvements are an ongoing process. But that does not mean that you are going to discredit the statistical system of a country which has been filled up assiduously over the years," said Ghosh.

In recent times, credit growth has lagged deposit growth. As interest rates have fallen, many Indians are looking to equity markets and mutual funds for better returns. Madan Sabnavis, the chief economist at Bank Of Baroda feels it's perhaps time that bank deposits were perhaps given some tax incentives to make them attractive.

Sabnavis pointed that if one parks money in a bank fixed deposit, he would get a 6-7 per cent return. In a mutual fund one could get a 12-odd per cent returns over a longer term. and therefore he feels a need to give certain tax incentives for deposits.

"India is still a bank-oriented economy. The banks are financing infrastructure and MSMEs in the priority sector and every particular sector. We are not in a stage where we can say let the market decide. Today we have this crazy situation. Banks don't have funds," he stressed. He added bank conducting open market operations to address liquidity conditions could only be a short-term solution.

Ghosh agreed that depositors had to be supported in terms of fair returns.

It was pointed that close to 40 per cent of the fixed deposits were held by senior citizens, and lower returns would impact their spending power.

Ghosh opined that deposits should be supported, but there could be some policy prescription whereby it's up to a limited extent.