Neelkanth Mishra defends GDP data, calls criticism 'totally wrong'

Economist Neelkanth Mishra has strongly defended India’s GDP growth of 7.8% in the first quarter of the current fiscal year, dismissing as “ill-educated and wildly incorrect” claims that the growth was inflated by revisions to a series of national accounts.

“…I was shocked to see the ill-educated and wildly incorrect claims by some that if the ‘original’ base of the June-2025 quarter had been used, growth in the June-2026 quarter would have been much lower,” Mishra, who is the World Bank’s managing director for India, Bhutan, Bangladesh and Sri Lanka, said in a post on economic growth on X, which would rather suggest that a revision of economic growth in the series X indicated strong economic growth.

Mishra’s comments came after former finance minister Subhash Chandra Garg courted controversy by questioning the credibility of the official GDP growth estimate for April-June (Q1). Garg argued that the high Q1 growth was achieved by lowering the GDP base for the April-June quarter of the previous year. He indicated that India’s Q1 GDP growth would have been just 2.6% in nominal terms and close to zero in real terms if the previous year’s GDP data had not been revised.

Quick answers to key questions

•5 QUESTIONS

Neelkanth Mishra defends the 7.8% GDP growth by saying that the criticism of inflated growth due to the revision of a series of national accounts is baseless and “grossly wrong”. He emphasizes that growth is supported by strong economic indicators rather than any manipulative adjustments.

Mishra cites several robust indicators, including 35% year-on-year growth in passenger vehicle shipments, over 40% growth in commercial vehicle shipments, significant acceleration in tax collection and surprising credit growth, illustrating strong economic momentum.

The revision of the base year of GDP from 2011–12 to 2022–23 allowed for more accurate estimates and cleaner data, resulting in nominal GDP being revised from ₹86.05 trillion to around ₹80 trillion. This process provided a more reliable basis for the reported GDP growth of 7.8%.

Critics, including former finance minister Subhash Chandra Garg, say the new GDP methodology and base year revisions artificially inflate growth figures. They suggest that without these adjustments, the growth rate would have been significantly lower, casting doubt on the credibility of the adjustments.

Neelkanth Mishra and the Government of India argue that the GDP growth figures are credible, backed by improved methodologies and robust economic indicators. They support confidence in these statistics, despite criticism from some economists about the base year revisions.

Read also | Center defends GDP estimates, says revisions reflect updated data, methodology

Rejecting this argument, Mishra said that the new series introduced in February 2026 had cleaned up the data and also significantly improved the methodology. “For those who follow this for a living (and I was as recently as 45 days ago) – the downward revision in the base was known in March… As confirmed by our note (Axis Bank’s note), the new series has increased the credibility of the actual output estimates,” Mishra wrote in his post on X.

Mishra, who was until recently chief economist at Axis Bank before moving to the World Bank, said the claim (of inflating GDP numbers) is so patently wrong that several logical rebuttals have already been made. But bad information tends to spread further than good information, so it’s important to repeat and reinforce the argument, he said in his post.

Mishra’s defense comes a day after the government also stood by its GDP growth numbers, with the Ministry of Statistics and Program Implementation issuing a detailed explanation in a question-and-answer format, refuting accusations of artificially raising real growth in the three months to June to 7.8% and nominal expansion to 10.3%.

Strong economic indicators

The clarification also came on a day Japan’s JCR raised its sovereign rating on India to ‘A-‘ from ‘BBB+’ and assigned a ‘stable’ outlook, citing the country’s strong growth prospects and improved fiscal metrics.

“That such claims have taken hold is surprising in itself, given that easy-to-track and unfalsifiable indicators of economic activity have been so robust,” Mishra said, adding that while the data for June was strong, the momentum had picked up.

It said shipments of passenger vehicles (cars, SUVs) rose 35% year-on-year in August, despite only 9% export growth. Even two-wheeler growth is now more than 20% (though helped by strong exports), he said.

Read also | Japan’s credit rating agency has raised India’s sovereign rating to A- from BBB+

Mishra also said that commercial vehicle shipments are up over 40%, tax collection growth has picked up significantly and credit growth continues to surprise on the upside (albeit on a low base).

“Last year, most believed that the weak credit growth at the time was a demand issue, while we persisted in saying that it was a supply issue – for now, it has been resolved,” Mishra said.

He said that hopefully now fewer people will ask “why private sector investment is weak” given that there is clear evidence of investment. However, the economy is still holding up, as evidenced by weak real wage growth. It may take several quarters of above-trend growth for this slack to tighten and bring back sticky inflationary pressures, Mishra’s post said.

Why has the base of GDP changed?

On 31 August, the Ministry of Statistics released an updated series of annual and quarterly GDP estimates with 2022–23 as the base year, introducing a new producer price index, banking services price index and other administrative data.

In a clarification on Wednesday, the ministry said that nominal GDP for the June quarter of the last fiscal year was initially estimated at ₹86.05 trillion as per the old series of base year 2011-12. Following the introduction of a new GDP series with 2022–23 as the base year in February 2026, the estimate was revised to ₹80.32 trillion and subsequently up to ₹80.44 trillion as of June 5, based on the latest data. As new series of Industrial Production Index and Producer Price Index series became available, the nominal GDP estimate was adjusted to ₹80 million million crowns.

Read also | Services sector expands in August, but growth at four-year low, survey says

“So moving from ₹86.05 million crores ₹80.00 crore is the result of gradual revisions to the GDP series resulting from the base year change, incorporation of improved data sources and methodologies and updating of available indicators,” the ministry said.

“It is therefore incorrect to interpret the difference as a deliberate downward revision of last year’s GDP to mechanically increase the current year’s growth rate,” he added.