Sharp GDP revisions show need to focus on better datasets

Growth rates for 2023-24 were significantly lowered in the new GDP series released Friday. That means policy decisions like the GST rate cuts might not have been timed when they were needed.

Chief Economic Advisor V Anantha Nageswaran has revised his 2026-27 real growth estimate upwards to 7-7.4 percent following the release and analysis of the new GDP series (Photo | PTI)

The statistical overhaul India is undergoing will convey more over time than it’s doing in the moment. But for now, what appears certain is that growth is strong and broad-based, with consumption and investment on the expenditure side and manufacturing and services on the supply side turning in decent performances. For 2025-26, real GDP growth is pegged at 7.8 percent, up from 7.4 percent estimated in the old series. Sequentially, third-quarter growth printed lower at 7.8 percent as against 8.2 percent seen in the second quarter; but it’s higher than the 7.4 percent registered during the same period in the previous year. Soon after the new dataset’s release, Chief Economic Advisor V Anantha Nageswaran revised his 2026-27 real growth estimate upwards to 7-7.4 percent. Pegging nominal growth at 10-11 percent, the CEA concluded that the economy would comfortably cross the $4-trillion mark by next March.

The biggest setback is in the nominal GDP. For 2025-26, it is now estimated at ₹345 lakh crore in absolute terms, down from about ₹357 lakh crore under the old series. It means, in dollar terms, the size of the Indian economy stands at $3.8 trillion, reduced from $3.9 trillion, making the wait to emerge as the fourth largest economy a bit longer. That said, what’s undeniable is that India has seen consecutive years of 7 percent growth with key components like manufacturing making a strong comeback. Agriculture and mining, however, need to punch higher than the 2025-26 projections, while services growth remains range-bound. Private investments are finally coming around and consumption seems steady with strong rural demand.

Among the various revisions, what stood out was the significant downward revision in 2023-24 numbers. Real GDP growth rates were revised down from 9.2 percent in the old series to 7.2 percent. All three components—agriculture, industry and services—saw sharp downward revisions. It’s true that this was due to methodological improvements. But it raises the pertinent question if policy interventions such as personal income tax cuts and GST rate rationalisation came a beat behind the actual music. Sound public policy rests on timely, credible and granular data. It’s now evident that we have been reading things wrong. For evidence-based decisions amid rapid changes, we need a harmony of datasets across ministries and states, besides continuous efforts at improving their quality and transparency.