Govt overhauls GDP data using granular CPI, WPI data to improve accuracy

India will overhaul how it calculates real GDP growth under a revised national accounts series due to launch this week, the ​country's top statistical official said, adopting more granular price deflation ​to address concerns raised by economists.

India measures real GDP - which adjusts for inflation - by ‌deflating nominal GDP growth using price indices. Economists have raised concerns that the method is outdated as it relies more on the wholesale price index and not the more closely tracked consumer price index.

"We will now use about 500-600 items from the new CPI and the old WPI series, compared with about 180 earlier, to deflate the output and improve accuracy of the data," Saurabh Garg, secretary in the Ministry of Statistics and Programme Implementation, said in an interview.

 

He said this practice will continue until a revised WPI series is released, which is expected shortly.

Under previous methods, low nominal ‌GDP growth alongside low wholesale inflation created discrepancies by translating into higher real growth rates.

Under the old series, India's economy - among the fastest growing major economies in the world - is estimated to expand by 7.4 per cent in 2025/26 against a growth rate of 6.5 per cent in 2024/25.

Nominal GDP - which reflects output measured at current market prices - is estimated to grow 8.0 per cent in the current year.

A new GDP series with a 2022/23 base year will be ​released on February 27, along with back-series data for the previous four years.

Statistical Overhaul

The changes are part ‌of a broader revamp of India's statistics, following the release of a new retail inflation series earlier this month. Revisions to wholesale inflation and industrial output are ​also under ‌way.

In November, the International Monetary Fund raised concerns over weaknesses in India's national accounts methodology. The ‌IMF cited the outdated 2011/12 base year, reliance on wholesale prices and extensive use of single deflation. It assigned the framework a "C" rating.

At the core of the overhaul is ‌the ​shift to double ​deflation, which separately adjusts output and input prices to measure real value added.

Garg said the reforms will improve accuracy, particularly in manufacturing, where diverging input and ‌output prices had ​raised concerns about bias under the earlier single-deflation method.