India's economy is reportedly growing at an impressive 8.2%, yet the IMF has assigned its national accounts a 'C' grade

due to methodological weaknesses. This rating highlights concerns about outdated base years, price deflators, and data

granularity, sparking a debate over the accuracy of the reported growth figures.

The real question, for India and for those watching it, is how quickly the statistical machinery can catch up with an

economy that is changing faster than almost any other. (AI image)

How strong is India’s economy really, going by the latest 8.2% GDP print? India just reported another head-turning GDP

number. The latest data show the economy growing a little over 8% in real terms, keeping India at the front of the

global growth pack. Just a few days before the release of the GDP data, the IMF quietly released its annual “Article IV”

report on India - and in a dense annex, it gave India’s national accounts (the system that produces GDP, GVA and related

numbers) an overall grade of “C.” It is possible for those two things to be true at the same time: The economy is

developing quickly and the statistics are not totally perfect. But as expected, they've gotten into a political and

technocratic spat over something that generally doesn't get much attention: How to count the economy and who gets to

assess the counters.

After India’s 8.2% GDP Jump, Piyush Goyal Credits Reforms And Predicts Strong, Sustained Expansion

Here's an explanation of economic growth and how the IMF rates GDP data.India’s GDP jumps 8.2%: Fastest growth in 6

quarters despite US tariff shock India’s economy accelerated to its quickest pace in six quarters in the July–September

period, expanding 8.2% year-on-year and comfortably topping market expectations of around 7.3%. The outturn also marked

an improvement on the previous quarter’s 7.8% print and came despite fresh US tariffs of up to 50% on a swathe of Indian

exports. The latest release underlines how much of the growth impulse is coming from households and factories. Private

consumption, which makes up roughly 57% of GDP, grew 7.9%, faster than the previous quarter, helped by tax cuts on

everyday goods and heavy stocking ahead of the festival season. On the supply side, manufacturing output jumped 9.1% and

construction rose 7.2%, while overall gross value added increased 8.1%, suggesting that both industry and services are

contributing meaningfully to the upturn. Also Read | GDP grows at 8.2%, fastest in 6 quarters: What the data really says

about Indian economy - explained The data arrive at a delicate moment for monetary policy. Headline retail inflation in

October fell to a record-low 0.25%, creating textbook room for rate cuts, and the Reserve Bank of India has already

lowered its benchmark rate by 100 basis points over the course of the year. Some analysts still expect a 25-basis-point

cut at the upcoming policy meeting, arguing that the inflation trajectory remains benign, but concede that the growth

surprise has tilted the balance of risks.

India's Q2 GDP Growth: What Experts Are Saying

What exactly did the IMF say about India’s data? Every year or two, the IMF doesn’t just opine on fiscal deficits and

interest rates. It also rates whether a country’s data are good enough for the Fund to do its job. In the latest India

report, that judgment appears in a section called the Data Adequacy Assessment for Surveillance.The Fund looks at five

broad blocks of statistics:

national accounts (GDP, GVA, investment, etc.),

prices (inflation indices),

government finance,

external sector (trade, balance of payments), and

monetary and financial data.

Each block gets a letter grade from A to D. The shorthand is simple:

A – good enough, no serious worries.

B – basically fine, some gaps.

C – shortcomings that hamper, or at least somewhat hamper, surveillance.

D – not usable for serious macroeconomic work.

For India, the IMF’s bottom line is slightly schizophrenic. In the main text, the staff say that India’s official

statistics are “broadly adequate for surveillance,” and they lean heavily on those numbers to make the case that India

will remain one of the world’s fastest-growing large economies. But when you flip to the heatmap in the back, you see

the problem:

prices, fiscal and financial data sit in the B-ish zone,

national accounts - the very series underpinning all those glowing growth charts - get an overall “C.”

That “C” is what has set off the controversy. It doesn’t mean the IMF thinks India is faking its GDP. It means the Fund

believes that the methods, coverage and price adjustments behind those numbers have enough weaknesses that staff cannot

be fully confident when they parse the precise composition or timing of growth.Why did India’s GDP get a “C”? What are

the specific issues? The IMF doesn’t leave this to imagination; it lists its concerns in unusually plain language for an

official document. They cluster around five big themes.First, an economy measured in yesterday’s prices. India’s GDP

series still uses 2011–12 as the base year - a world before UPI, mass 4G data, platform work, many digital services and

parts of the green economy. When statisticians talk about “real” growth, they’re trying to strip out inflation by

comparing today’s economy to that old base-year structure. The further you get from 2011–12, the less that structure

resembles reality.Second, the deflator problem. To turn nominal rupees into real growth, you need trustworthy price

indices. The IMF notes that India still leans heavily on wholesale price indices and on simple, single deflation methods

for some sectors, because proper producer price indices are missing or incomplete. In practice, that means if prices

move differently across industries, the wrong deflator can quietly overstate or understate “real” growth, especially

when inflation is very low - exactly the environment India is in right now.Third, gaps between two ways of measuring

GDP. GDP can be measured by what is produced (the production side) or by what is spent (the expenditure side). In a

well-measured system, the two align with only a small “statistical discrepancy.” The IMF points to episodes in India

where the discrepancy is sizeable, and hints that this may reflect under-coverage of spending and of the informal

sector. In a country where a significant part of economic life happens in small firms, farms and self-employment, that’s

not a minor quibble.Fourth, no seasonal adjustment on quarterly data. Most advanced statistical systems publish

seasonally adjusted GDP, which strips out predictable patterns from monsoon cycles, festivals, and year-end fiscal

pushes. India doesn’t. The IMF notes the “lack of seasonally adjusted data” and suggests better methods for quarterly

national accounts. Without adjustment, it’s harder to tell whether a jump in one quarter is a genuine trend or simply

Diwali.Fifth, not enough granularity, especially on investment. For analysts trying to understand what exactly is

driving India’s boom - households vs corporations, public vs private capex - the data are not detailed enough, or arrive

with long lags. The Fund would like to see more timely, disaggregated series on gross fixed capital formation and on who

is doing the spending.Taken together, these aren’t accusations of manipulation. They’re a technical way of saying:

India’s GDP comes out fast and looks detailed, but parts of the machinery are outdated or incomplete enough that you

should treat the decimal points with some caution.How have the Indian authorities responded? What turns a technical

assessment into a controversy is not just the letter grade, but the tone of the pushback. In an accompanying statement,

India’s representative to the IMF accepts that there are “some shortcomings” in the statistical system. But he takes

sharp issue with the way staff have translated those into a C for national accounts.Two lines capture the mood.The

authorities say they “disagree with the overall rating of national accounts based on higher weightage assigned to

coverage.” In their view, the IMF’s scoring framework gives too much importance to one dimension (coverage) relative to

others (frequency, timeliness, internal consistency), and that skews the result.They then go further, calling this a

“skewedly weighted approach to rating, to say the least, [that] is misleading and goes against the spirit of

transparency, objectivity, and even-handedness.” Coming from within a formal IMF document, that is unusually blunt

language. Between the lines, India is alleging inconsistency across countries. Officials hint that when you compare

scores, some economies that look no better on data practices seem to get kinder treatment. The implication is political:

that “judgment” in the Fund’s framework is not being applied evenly. So both sides agree that India’s numbers need work.

They disagree on whether, in 2025, those weaknesses justify putting a big “C” next to the country’s headline growth

metric.

Sanjeev Sanyal on IMF criticism

Does this mean the Q2 8%-plus GDP number is wrong? This is the question that matters to everyone outside the small world

of statisticians. The honest answer is nuanced. The IMF is not saying India is inventing growth. In fact, its own

forecast narrative lines up with New Delhi’s story: India has been unusually resilient through multiple shocks; it is

likely to grow faster than most large economies over the next few years; consumption, manufacturing and investment have

all picked up. What the “C” does say is that the precision and comparability of those numbers are weaker than they

should be. A few examples make that concrete: * When real GDP growth is just a hair below nominal GDP growth, as it is

now, tiny changes in the price deflator can shift real growth by half a percentage point or more. If your deflator is

imperfect, that matters. * If the expenditure side of GDP undercounts parts of household consumption or the informal

sector, shifts between formal and informal activity can show up as changes in growth, even if underlying welfare hasn’t

moved as much. * Without seasonal adjustment, a festival-heavy quarter can flatter the trajectory, and a

monsoon-affected one can make it look as though momentum has vanished. For markets, rating agencies and policymakers,

the implication is: India is a high-growth story-take the broad message seriously, treat the exact decimals with

humilityWhat is India promising to fix - and by when? One reason this debate is so charged is that a major statistical

overhaul is already in motion. Both the IMF and the authorities acknowledge this. On the real sector, officials have

begun work on a new base year and fresh benchmark surveys. The goal is to shift GDP and CPI to a much more recent

reference year (likely around 2022–23), so that digital services, new forms of employment and post-pandemic changes in

consumption are properly captured. On methods, the plan is to:

roll out more producer price indices, and rely less on wholesale prices;

expand the use of double deflation and other modern techniques to better separate price changes from real output;

make systematic use of new data sources on unincorporated enterprises and informal work.

On the broader statistical system, work is under way to update the CPI basket and weights; to publish more frequent

labour market indicators; and to resume consolidated general government accounts with shorter lags. In other words,

India is moving in the direction the IMF wants. The fight is over the interim label. Should a country that is

mid-overhaul be branded with a “C,” or given more benefit of the doubt while fixes come onstream?Why does any of this

matter beyond Delhi’s policy circles?For one, growth rankings and political narratives depend on these numbers. Being

the “fastest growing large economy” is now a core part of India’s self-description. If the world’s main multilateral

lender suggests that the growth series rests on shaky methods, it chips away at that branding.Second, distributional

questions - who is benefiting from growth, and how much - hinge on details of the national accounts. If informal work is

mismeasured, or investment by different sectors is blurred together, it becomes harder to answer the questions voters

ask most often: are my wages keeping up, is my region being left behind, is public investment crowding out or crowding

in private activity?Finally, there is a broader lesson about the politics of expertise. A decade ago, arguments over GDP

rebasing would have been confined to technical committees. Today, they spill quickly into op-eds, press conferences and

social media. The IMF’s “C” for India’s national accounts is not just a line in a table; it is a test of trust - in

domestic statisticians, in international institutions and in the stories governments tell about economic success. The

numbers will keep coming every quarter. The real question, for India and for those watching it, is how quickly the

statistical machinery can catch up with an economy that is changing faster than almost any other - and whether, when the

next IMF report card arrives, the argument has moved from grades to genuine improvement.(With inputs from agencies)

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