Neelkanth Mishra Defends GDP Data, Calls Criticism 'Egregiously Wrong'

(MENAFN- Live Mint) Economist Neelkanth Mishra has strongly defended India's 7.8% GDP growth in the first quarter of the current fiscal, dismissing claims that the growth was inflated by the revision of the national accounts series as“ill-educated and egregiously wrong”.

“...I was shocked to see the ill-educated and egregiously wrong claims made by some that if the 'original' base of June-2025 quarter was used, growth in the June-2026 quarter would be much lower,” Mishra, who is the World Bank executive director for India, Bhutan, Bangladesh and Sri Lanka, said in post on X suggesting that strong economic indicators pushed up growth in the economy rather than revision of GDP series.

Mishra's comments came after former finance secretary Subhash Chandra Garg sparked a controversy by questioning the credibility of the official GDP growth estimate for the April-June quarter (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 suggested that India's Q1 GDP growth would have stood at a mere 2.6% in nominal terms and close to zero in real terms had the previous year's GDP numbers not been revised.

Quick answers to key questions

.5 QUESTIONS1Why is Neelkanth Mishra defending the 7.8% GDP growth in India?⌵

Neelkanth Mishra defends the 7.8% GDP growth by asserting that criticisms regarding inflated growth due to the revision of the national accounts series are unfounded and 'egregiously wrong'. He emphasizes that strong economic indicators support the growth rather than any manipulative adjustments.

2What indicators are cited as evidence of strong economic growth in India?⌵

Mishra mentions several robust indicators, including a 35% year-on-year growth in personal vehicle dispatches, over 40% growth in commercial vehicle dispatches, a significant pickup in tax collection, and surprising credit growth, illustrating strong economic momentum.

3How did the revision of the GDP base year impact the reported GDP growth?⌵

The revision of the GDP base year from 2011-12 to 2022-23 allowed for more accurate estimates and cleaner data, leading to a nominal GDP adjustment from ₹86.05 trillion to approximately ₹80 trillion. This process provided a more reliable basis for the reported 7.8% GDP growth.

4What are the criticisms regarding the new GDP methodology introduced in 2026?⌵

Critics, including former finance secretary Subhash Chandra Garg, argue that the new GDP methodology and base year revisions artificially inflate growth figures. They suggest that without these adjustments, the growth rate would be significantly lower, questioning the credibility of the adjustments.

5Should the public trust the GDP growth figures reported by the government?⌵

Neelkanth Mishra and the Indian government assert that the GDP growth figures are credible, backed by improved methodologies and robust economic indicators. They encourage trust in these statistics, despite criticism from some economists regarding the base year revisions.

Also Read | Centre defends GDP estimates, says revisions reflect updated data, methodology

Rejecting this argument, Mishra said that the new series introduced in February 2026 cleaned up the data and also significantly improved the methodology.“For those who track this for a living (and I used to be one such till 45 days ago) - the downward revision in the base was known in March...As our note (Axis Bank note) acknowledged, the new series increased credibility of estimates of real output,” Mishra wrote in his post on X.

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

Mishra's defence comes a day after the government also stood by its GDP growth numbers, with the ministry of statistics and programme implementation issuing a detailed clarification in a question-and-answer format, refuting allegations of artificially pushing up the real growth rate for the three months through June to 7.8% and the nominal expansion rate to 10.3%.

Strong economic indicators

The clarification also came on a day when Japanese credit rating agency JCR raised its sovereign rating on India to 'A-' from 'BBB+' and assigned a 'stable' outlook, citing the country's robust growth prospects and improved fiscal metrics.

“That such claims got traction is itself surprising, given that easy-to-track and not-possible-to-fudge indicators of economic activity have been so robust,” Mishra said, adding that while the June-quarter data was strong, that momentum has picked up.

He cited that personal vehicle (cars, SUVs) dispatches grew 35% year-on-year in August despite just 9% growth in exports. Even two-wheeler growth is now more than 20% (though helped by strong exports), he said.

Also Read | Japan Credit Rating Agency upgrades India's sovereign rating to A- from BBB+

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

“Last year most believed the then-weak credit growth was a demand problem, whereas we steadfastly stated it was a supply issue - it has for now been addressed,” Mishra said.

He said that, hopefully, now there will be fewer people asking "why private sector investment is weak," given that there is clear evidence of investments. However, there is still slack in the economy, as seen in weak real-wage growth. It may take several quarters of above-trend growth for that slack to tighten, and bring back sticky inflation pressures, Mishra's post said.

Why the GDP base changed

The statistics ministry had on 31 August released an updated series of annual and quarterly GDP estimates with 2022-23 as the base year, rolling out a new Producer Price Index, Banking Services Price Index and extra administrative data.

In its clarification on Wednesday, the ministry said the nominal GDP for the June quarter of the last fiscal was initially estimated at ₹86.05 trillion under the old 2011-12 base-year series. Following the introduction of the new GDP series with 2022-23 as the base year in February 2026, the estimate was revised to ₹80.32 trillion, and subsequently to ₹80.44 trillion on 5 June based on latest data. Once the new series of Index of Industrial Production and Producer Price Index series were available, the nominal GDP estimate was revised to ₹80 lakh crore.

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

“Thus, the movement from ₹86.05 lakh crore to ₹80.00 lakh crore is the result of successive revisions to the GDP series arising from the change in base year, incorporation of improved data sources and methodologies, and updation 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,” it had added.

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