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The IMF identifies outdated deflators, gaps in informal-sector coverage, and weak seasonality — precisely the areas MoSPI’s new GDP architecture is now overhauling
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India today is a rare economy that can plausibly grow at 7–8 per cent and yet receive a “C” on the quality of its GDP data from the IMF. That juxtaposition makes for splashy headlines, but it should be read as a technical audit, not a vote of no-confidence. The real story is that IMF staff have identified specific weaknesses in the way India measures GDP, and the Ministry of Statistics and Programme Implementation (MoSPI) has already begun re-engineering much of that architecture.
In the 2025 Article IV report, the IMF grades different statistical systems – national accounts, prices, government finance, external sector, and monetary and financial data based on coverage, consistency, frequency, timeliness, and granularity. India’s national accounts received an overall C, with C for coverage, B for granularity, and A for frequency and timeliness. Other domains (prices, fiscal, external, financial) score mostly Bs.
The real story is that IMF staff have identified specific weaknesses in the way India measures GDP, and the Ministry of Statistics and Programme Implementation (MoSPI) has already begun re-engineering much of that architecture.
IMF staff have highlighted four concrete issues in the current 2011-12 GDP series. First, an outdated base year and price structure (2011-12). Second, the use of the Wholesale Price Index (WPI) as a deflator and heavy reliance on single deflation, because India lacks a proper Producer Price Index (PPI) and double-deflation framework. Third, large and variable gaps between GDP measured from the production side and from the expenditure side, implying weaknesses in the expenditure data and informal-sector coverage. Fourth, the lack of seasonally adjusted quarterly GDP and limited disaggregation, which makes high-frequency analysis harder. This piece attempts to decode and identify the steps already implemented — and those necessary — to address these shortcomings.
Using 2011-12 as the base year means that volume measures of GDP still assume a price and structural pattern that is more than a decade old. An old base year means the Laspeyres weights used to build real GDP no longer reflect the current production and expenditure structure. This can bias growth estimates if high-growth sectors are under-weighted and declining sectors are over-weighted.
MoSPI has already constituted an Advisory Committee on National Accounts Statistics (ACNAS), chaired by Prof. B.N. Goldar, to guide a full rebasing of the national accounts. The new base year is 2022-23, and a new GDP series will be released on 27 February 2026. The same base year is being adopted for the Index of Industrial Production (IIP) and aligned with revisions in CPI, to maintain consistency across major macro indicators. IMF’s biggest “C-driver” is therefore already being directly addressed. The real test will be execution – transparent documentation, back-casting of historical series, and clear communication so that policymakers and markets can interpret breaks in the data correctly.
Real GDP is obtained by deflating nominal value added by a price index. Ideally, it should be producer price indices (PPI) for both output and intermediate inputs and use double deflation (one deflator for output, another for inputs). In India, the WPI has been used as a proxy PPI for many industries and often applied as a single deflator. This can distort real value added, especially when input and output prices move differently over the cycle.
On this point, the IMF’s own annex is quite positive about the ongoing reform. IMF notes that the rebasing project explicitly aims to “minimize the use of single deflation, increase the number of activities using volume extrapolation or, where possible, double deflation”, and to use a supply-use table framework to improve consistency. It also records that the IMF capacity development is supporting MoSPI in using supply-use tables, seasonal adjustment and better deflation practices.
A Producer Price Index architecture has been under development for several years. A government working group had already recommended migrating from WPI towards a PPI-type framework, recognising that PPI is conceptually closer to what national accounts need. The Article IV report notes that an expert group has now been constituted to work on a PPI, and that in sectors where WPI is already close to ex-factory prices, the difference between WPI and PPI may be small.
Ideally, GDP by production (sum of value added across industries) and GDP by expenditure (C+I+G+X–M) should match, with only a small statistical discrepancy. When discrepancies are large, volatile or one-sided, it suggests that some spending or some output is being missed – often consumption of informal services, small construction, or changes in inventories. The MoSPI discussion paper precisely talks about plugging these coverage gaps in the real-sector and informal side.
In the current series, unincorporated non-agricultural enterprises are handled through an “effective labour input” method using old benchmark surveys and extrapolation. In the new series, MoSPI will instead use Annual Survey of Unincorporated Sector Enterprises (ASUSE) data for value added per worker and Periodic Labour Force Survey (PLFS) data for the workforce. This will generate annual Gross Value Added (GVA) estimates for the unincorporated sector rather than extrapolating from a decade-old base.
The IMF report criticises an outdated base year, over-reliance on WPI and single deflation, and incomplete coverage of the informal and expenditure sides. MoSPI’s discussion paper and the wider base-year overhaul are explicitly designed to fix exactly these issues
New company-law returns (MGT-7/7A) are being used to split multi-activity firms into separate industry-wise activities, instead of allocating all value added to a single major activity. The frame of active Limited Liability Partnerships (LLPs) is now being brought fully into the GDP estimates, with scaling based on “obligation to contribution”, so non-filers are covered. Input–output ratios in agriculture, forestry, and fisheries are being updated using dedicated studies from specialised institutes (Central Marine Fisheries Research Institute, Central Inland Fisheries Research Institute, Indian Grassland and Fodder Research Institute), moving away from fixed ratios that dated back in some cases to the 1950s. The general government sector now includes better coverage of autonomous bodies and local governments, with location-wise Drawing and Disbursing Officer (DDO) data allowing direct allocation to states.
A further structural addition is planned. India’s first national Household Income Survey will be released in 2026, which will finally give direct estimates of household incomes and their distribution, complementing consumption and employment surveys. This will be vital for reconciling household income and expenditure with GDP.
Without seasonal adjustment, it is hard to distinguish real turning points from predictable seasonal patterns – e.g., festive season spikes or monsoon-related slowdowns. Limited sectoral breakdown of investment and quarterly data constrain analysis of which sectors are driving the capex cycle and whether public investment is “crowding in” private investment. IMF itself reports that capacity development has already covered seasonal adjustment and dissemination practices. IMF experts are helping MoSPI develop seasonally adjusted estimates and better benchmarking techniques as part of the rebasing project.
The economy is explicitly divided into non-financial corporates, financial corporations, general government, households and non-profit institutions serving households (NPISH), following the 2008 System of National Accounts (SNA 2008). Corporate data are now stratified by industry × size class, with more targeted multipliers to handle non-filers, acknowledging differences in capital intensity across industries and size. Financial-sector GVA is broken into nine sub-sectors, using richer datasets such as STRBI and MCA-21 for non-banking financial companies (NBFCs), and a more detailed treatment of moneylenders, pension funds and insurance auxiliaries. These changes expand the analytical potential of institutional-sector accounts and, over time, should allow faster and richer breakdowns of investment, saving, and balance sheets.
India’s growth story is real enough that it now needs a measurement system worthy of it. Getting that right is not about impressing the IMF; it is about giving Indian policymakers, firms, and citizens a sharper, more honest mirror of their own economy.
For policymakers, the IMF’s “C” for national accounts is best read as a technical wake-up call that largely validates the direction of current reforms. The IMF report criticises an outdated base year, over-reliance on WPI and single deflation, and incomplete coverage of the informal and expenditure sides. MoSPI’s discussion paper and the wider base-year overhaul are explicitly designed to fix exactly these issues – through a 2022-23 base year, richer data sources (MCA-21, ASUSE, PLFS), sector-wise input–output updates, and IMF-supported improvements in deflation and seasonal adjustment.
India’s growth story is real enough that it now needs a measurement system worthy of it. Getting that right is not about impressing the IMF; it is about giving Indian policymakers, firms, and citizens a sharper, more honest mirror of their own economy. If the reforms outlined in the MoSPI papers are implemented with rigour, transparency, and speed, there is every reason to expect that India’s next statistical report card will read B or A — robust and policy-relevant.
Arya Roy Bardhan is a Junior Fellow with the Centre for New Economic Diplomacy at the Observer Research Foundation.
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Arya Roy Bardhan is a Junior Fellow at the Centre for New Economic Diplomacy, Observer Research Foundation. His research interests lie in the fields of ...
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