India’s GDP Statistics Get a C-Grade — Data Quality & Revising Methods

Context:

In its 2025 annual review of India under Article IV consultations, the IMF assigned a ‘C’ grade to India’s national accounts data (which includes GDP / GVA statistics) — the second‑lowest on its four‑tier scale (A to D). A “C” signals that while data are provided, methodological and structural weaknesses remain. Notably, other statistical categories (prices, fiscal, external sector, financial statistics) received a “B” — indicating they are “broadly adequate.”

Reason for C grade:

The IMF cited several long‑standing issues with India’s national accounts and GDP estimation methodology. Major concerns include:

- Outdated Base Year (2011–12): India still uses 2011–12 as the base year for GDP, GVA, and related indices. Over one decade, the structure of the economy — sectoral composition, price dynamics, emergence of new sectors (digital services, platform economy) — has changed significantly. The outdated base distorts real value-added and growth estimates.
- Deflation Method Issues: India often uses the Wholesale Price Index (WPI) to deflate nominal output to real GDP — instead of a comprehensive Producer Price Index (PPI) or sector‑wise deflators. This can introduce distortions, particularly with divergent inflation across sectors.
- Weak Informal Sector Coverage & Data Gaps: The informal/unorganized sector remains large but is difficult to capture — data on small enterprises, unregistered services, household enterprises, etc., remain patchy. This undermines expenditure-side estimates, leading to potential underestimation or misreporting of value added and consumption.

Significance of IMF’s Assessment:

Aspect	Details / Implications
Policy Formulation & Macroeconomic Management	Reliable GDP, GVA, inflation, and fiscal data underpin monetary policy, fiscal planning, social welfare schemes, and macroeconomic forecasting. Data gaps hinder effective decision-making.
Investor Confidence & Global Perception	Institutional investors, multilateral agencies, and rating agencies rely on credible data. Persistent methodological issues may weaken confidence, affecting foreign investment and India’s global economic standing.
Transparency, Accountability & Public Trust	Credible data supports democratic accountability, evidence-based policy debates, and informed public discourse.
IMF C-Grade Significance	Acts as both a warning and opportunity — highlighting need for deep statistical reforms and signaling India’s recognition of these gaps to global stakeholders.

Way Forward:

Reform Area	Planned Actions
New GDP Series (Base Year 2022–23)	Launch in February 2026; incorporate structural changes, updated sector weights, and new data sources.
Revision of CPI & Other Indices	Update consumption basket and base year to improve inflation measurement accuracy.
Improved Data Coverage & Methods	Integrate informal sector estimates, leverage corporate/GST/tax data, enhance enterprise & household surveys, and use producer/sector-wise price indices instead of WPI.
Institutional Strengthening & Transparency	Ensure methodological transparency, data integrity, and alignment with international best practices for global comparability.

Conclusion:

While India’s GDP data currently exhibit certain limitations, ongoing reforms promise a modernised, internationally aligned statistical framework. The release of the new GDP series in 2026 is likely to enhance data credibility and strengthen India’s macroeconomic monitoring.