Vivek Kaul: India’s 8.2% GDP looks great…until you look closer
The growth headline is impressive, but once you peel back the layers, the story becomes far more complex – and far less comforting.
India’s real gross domestic product (GDP) growth for July to September 2025 stood at 8.2 percent – the highest since January to March 2024. GDP growth is a measure of how fast an economy is expanding, while real GDP growth adjusts for inflation to reveal how much of that expansion is driven by actual economic activity rather than rising prices.
The reasons behind strong growth
India calculates GDP in two ways: the production method and the expenditure method.
Under the production method, also called the gross value added approach, GDP is derived by summing up the value added by all sectors – agriculture, industry, and services – plus indirect taxes, like goods and services tax and excise duties, minus subsidies, like food and fertilisers. This approach shows which sectors are driving growth.
Under the expenditure method, GDP is calculated by summing up all spending in the economy: private consumption, government expenditure, investment, and net exports (exports minus imports). This approach tries to capture growth from the demand side.
If we look at the gross value added approach, the manufacturing sector within industry grew 9.1 percent. The services sector as a whole grew 9.2 percent, with financial services, real estate, and professional services, growing a solid 10.2 percent. Further, public administration, defence and other services, which are a good proxy for what the government is doing, grew 9.7 percent.
On the expenditure side, private consumption grew 8 percent and investment 7.3 percent. And this helped push economic growth beyond 8 percent.
If I were writing this as a report for a stock brokerage based in Central or South Mumbai, or a corporate-funded economic think tank based in South or Lutyens’ Delhi, I could have stopped at this point, added a few random charts to give it that slightly intellectual look, which would have helped people take me more seriously than they actually do, sent it off to be published in the form of a nice PDF, which would then be shared on WhatsApp, and gotten back to reading that excellent police procedural I started last night. But alas that’s not how simple my life is.
So, what does an economic growth rate of 8.2 percent really tell us, and not tell us, are the questions I will try to answer here. Indeed, India’s 8.2 percent GDP growth during July to September 2025 appears strong, but a closer look reveals underlying fragility: growth is uneven, many are not seeing its benefits, and structural and calculational challenges remain.
