The Centre has published a set of Frequently Asked Questions (FAQ) to clarify the methodology of India's latest GDP estimates and address queries regarding the revised GDP series.
These clarifications followed the Centre's adjustment of the GDP estimate for the first quarter of the fiscal year 2025-26. The adjustment was made due to the introduction of a new GDP series, which uses 2022-23 as the base year, as well as updated data and methodologies.
The GDP estimate at current prices for the first quarter of the fiscal year 2025-26, which was initially 86.05 trillion rupees under the old series with a 2011-12 base year, is now estimated at 80 trillion rupees.
According to the National Statistical Office data, the Indian economy showed growth of 7.8 percent in the June quarter of fiscal year '27, compared to 8.6 percent in the previous March quarter of fiscal year '26. Furthermore, nominal GDP increased by 10.3 percent in the June quarter, higher than the 9.1 percent recorded in the previous March quarter.
Details on the Revised GDP Series
The Centre emphasized that interpreting the GDP revision as a 'deliberate reduction of last year's GDP to mechanically increase this year's growth rate' is incorrect.
It was noted that the initial GDP estimate at current prices for the first quarter of fiscal year 2025-26 was 86.05 trillion rupees under the old 2011-12 series. After the introduction of the series with a 2022-23 base year, this figure was changed to 80.32 trillion rupees in February 2026. It was subsequently adjusted to 80.44 trillion rupees in June and finally settled at 80 trillion rupees after incorporating new IIP and PPI series.
The Centre explained that the transition from 86.05 trillion rupees to 80.00 trillion rupees is a result of sequential changes in the GDP series caused by the change in the base year, integration of improved data sources and methodologies, and updating of available indicators. It was also added that the old figure of 86.05 trillion rupees cannot be directly compared with the latest estimate for the first quarter of fiscal year 2026-27, as they belong to different GDP series.
What Has Changed in the New GDP Series
The updated series uses 2022-23 as the base year instead of 2011-12 and incorporates new data sources, such as the Output Producer Price Index and the Banking Services Price Index, both based on 2022-23.
The key methodological change is the implementation of double deflation for the manufacturing industry. Under this approach, output and intermediate consumption are deflated separately to derive gross value added at constant prices. The Centre noted that the updated methodology is more robust, while the IMF describes double deflation as the preferred method for calculating real GDP.
How Can Manufacturing Show Negative Inflation Despite Rising Prices for Products and Raw Materials
The government explained that with double deflation, output and intermediate consumption in the manufacturing industry are deflated separately to account for price fluctuations. When raw material prices rise faster than finished product prices, nominal gross value added may grow slower than real gross value added, leading to a negative implicit GVA deflator. In the first quarter of fiscal year 2026-27, nominal GVA in manufacturing grew by 7.7 percent, while real GVA increased by 9.2 percent, resulting in an implicit GVA deflator of -1.5 percent. The government clarified that negative inflation in the manufacturing sector's implicit deflator does not imply a fall in product prices.
How Does GDP Inflation Differ from CPI and WPI Inflation
The Centre pointed out that these three indicators reflect different aspects of the economy. The Consumer Price Index (CPI) measures price changes in a specific basket of goods and services consumed by households, whereas the Wholesale Price Index (WPI) covers wholesale goods, raw materials, and finished products at the wholesale level. The GDP deflator, conversely, accounts for the entire economy, including government expenditure, investment, exports, as well as financial and non-financial services. Consequently, the GDP deflator is not obliged to move in sync with CPI or WPI. The government explained that it is a derived indicator reflecting the price impact of over 300 individual price deflators used at the commodity or group level.
Will the Latest GDP Estimates Be Revised Again
The Centre stated that the statistical discrepancy between GDP estimates compiled using production and expenditure approaches constitutes a statistical adjustment item. The movement of this figure itself cannot serve as proof that GDP is underestimated or overestimated. The direction and magnitude of any future revisions will depend on corrections in the base estimates for production and expenditure. The Centre added that it is impossible to conclude in advance whether the GDP will necessarily be revised upwards or by a specific amount.