New Delhi, Sept. 2 -- The Centre on Wednesday released a detailed set of frequently asked questions (FAQs) to address concerns over India's 7.8 per cent real GDP growth in the April-June quarter, explaining the methodology behind the new GDP series, revisions to earlier estimates, the negative manufacturing deflator and differences between GDP, consumer and wholesale inflation. The Ministry of Statistics and Programme Implementation (MoSPI) also rejected claims that the latest growth rate was made to look stronger by lowering last year's GDP estimate, saying the criticism compared figures from two different GDP series.

The FAQs came after Congress leaders questioned the credibility of the latest growth numbers and former finance secretary Subhash Chandra Garg argued that current-price growth would have been about 2.6 per cent if the previous year's GDP estimate had not been revised.

Statistics Secretary Saurabh Garg said the comparison was an "apples and oranges" exercise because the Rs 86.05 lakh crore figure cited by critics belonged to the old 2011-12 base-year series. That series was replaced in February 2026 when the government introduced a new GDP series with 2022-23 as the base year.

Under the new series, Q1 FY2025-26 current-price GDP was initially estimated at Rs 80.32 lakh crore. It was subsequently revised to Rs 80.44 lakh crore and then to Rs 80 lakh crore after additional data, including updated Index of Industrial Production (IIP) and Producer Price Index (PPI) series, were incorporated. MoSPI said the changes were part of the normal revision process involving a new base year, improved data sources, revised methodologies and additional indicators.

The ministry said growth comparisons should use estimates from the same series and constant prices, which remove the effect of price changes. It rejected the allegation that the earlier GDP figure had been reduced to mechanically raise the latest growth rate.

Data released on August 31 showed real GDP at Rs 81.36 lakh crore in Q1 FY2026-27, compared with Rs 75.46 lakh crore a year earlier, resulting in growth of 7.8 per cent. Nominal GDP rose 10.3 per cent to Rs 88.27 lakh crore from Rs 80 lakh crore, while real GVA increased 8.2 per cent to Rs 73.82 lakh crore.

A major section of the FAQs dealt with the manufacturing sector's negative 1.5 per cent implicit GVA deflator. MoSPI said the figure does not mean manufacturing prices declined.

The new GDP methodology uses double deflation for manufacturing, under which output and intermediate consumption are separately adjusted for price changes before real GVA is calculated. If input prices rise faster than output prices, nominal GVA can grow more slowly than real GVA. This can produce a negative implicit deflator even when both input and output prices are increasing.

Manufacturing real GVA grew 9.2 per cent in Q1 FY27, compared with nominal growth of 7.7 per cent, resulting in an implicit GVA deflator of minus 1.5 per cent. MoSPI cited textiles and cotton ginning, basic metals, and rubber and plastic products as activities where input-price growth exceeded output-price growth.

The ministry said similar negative or volatile manufacturing deflators can occur internationally when economies use double deflation during periods of sharp energy and raw-material price movements.

Agriculture is treated differently. Quarterly agricultural GVA is first estimated at constant prices using production data, with current-price estimates calculated later using the relevant producer-price index. The agriculture, forestry and fishing output PPI rose about 5 per cent during the quarter, resulting in an implied inflation rate of 3.9 per cent.

The FAQs also addressed why the implied GDP inflation rate of about 2.5 per cent differs from consumer inflation of 3.9 per cent and wholesale inflation of more than 9 per cent.

MoSPI said the GDP deflator is an economy-wide measure derived from the ratio of nominal to real GDP. It covers price movements associated with investment, government expenditure, exports and a broad range of services. By comparison, the Consumer Price Index tracks prices paid by households for a defined consumption basket, while the Wholesale Price Index focuses largely on goods and commodities and excludes services.

The ministry said more than 300 individual price deflators are used in GDP compilation. Differences in coverage, weights, price concepts and sectoral movements therefore mean the GDP deflator does not have to move in line with CPI or WPI.

MoSPI used mining to explain another apparent gap between nominal and real growth. Real mining and quarrying GVA contracted 2.4 per cent in Q1 FY27, while nominal GVA increased 22.3 per cent.

Mining IIP declined 3.8 per cent in April and 1.4 per cent in May before rising 1.6 per cent in June. At the same time, mining and quarrying PPI inflation stood at 22 per cent in April, 21.2 per cent in May and 15.5 per cent in June. Prices of crude petroleum and natural gas rose as much as 72.2 per cent in May, while metal-ore prices increased by more than 23 per cent in each of the three months.

The ministry said the sharp increase in mineral prices largely explains why nominal mining GVA rose even as real output contracted.

The FAQs also clarified that double deflation is used for production-side GVA and is not directly applied to Private Final Consumption Expenditure (PFCE).

On the statistical discrepancy between GDP calculated through production and expenditure approaches, MoSPI said it is a balancing item that can change as more complete data become available. Its size alone cannot establish that GDP has been overstated or understated. Future revisions could move the estimate in either direction, depending on changes in the underlying production- and expenditure-side data.

The ministry said such discrepancies become very small or zero in final current-price estimates, citing FY2022-23 and FY2023-24 as examples.

The government's FAQs followed criticism from Congress leaders over the 7.8 per cent growth figure. Jairam Ramesh cited former finance secretary Subhash Chandra Garg, who said, "If you had not revised last year's GDP, the growth in current prices would have been 2.6 per cent."

Ramesh said, "PR can polish the picture of GDP, but not the economy itself," while Congress leader Pawan Khera questioned the revisions and sought greater clarity on the growth calculation. Union minister Kiren Rijiju rejected the criticism and attacked the Congress over its response to the growth figures.

The updated GDP series, released on August 31, incorporates the 2022-23 base year, a new Output PPI, a Banking Services Price Index and additional administrative data. The Reserve Bank of India has projected full-year FY27 GDP growth at 6.7 per cent.

The next quarterly GDP estimates, covering Q2 FY27, are scheduled to be released on November 30, 2026.

Published by HT Digital Content Services with permission from Millennium Post.