In late-2010, Andreas Georgiou, a former International Monetary Fund economist, was parachuted into Athens by the European Union (EU) and IMF at the height of the euro-zone crisis to head the Hellenic Statistical Authority (Elstat), Greece’s new statistical agency. His task seemed innocuous: find out how badly Greece’s public finances had deteriorated and calculate a fair gross domestic product (GDP). For years, Greek governments had misreported fiscal data; they could not even account for parts of their own spending, including defence. But Mr Georgiou’s assignment turned out to be dangerous. Within weeks of taking office, his emails were hacked; within months, he was accused of betraying the national interest. Prosecutors eventually charged the man brought in to clean up Greece’s statistics with falsifying them. His alleged crime was to insist that the figures should add up. “In Greece, statistics is a combat sport,” remarked Mr Georgiou wryly. Supposedly dry and complex GDP data can provoke passionate outcomes at times.
This was in evidence last week, too, as India claimed its economy grew by 7.8% in the quarter ending June. Critics promptly questioned the arithmetic and thus began another instalment of India's increasingly raucous GDP wars. The dispute concerns methodology, base years, deflators and the various adjustments required to convert the bewildering activity of 1.4bn (billion) people into a single number. Former officials and economists have questioned whether the new GDP series is comparable with the old one. The government insists that critics are comparing apples and oranges. Yet, the spectacle has something comical about it. It assumes that there is a precise number called India's 'true' GDP growth hiding somewhere in the statistical undergrowth and that the job of economists is to flush it out.
GDP is only an estimate. Statisticians, like those elsewhere, work with samples, surveys, company accounts, tax returns and administrative data. Where information is missing, they infer. Where better information subsequently turns up, they revise. Quarterly estimates involve still more inference. India's problem is more acute than that of many rich countries. The formal economy is increasingly well documented, thanks to the goods and services tax (GST), digital payments, and e-way bills. But millions of small firms and workers still inhabit the statistical penumbra. Nor would India be the first country to have trouble measuring itself. China's GDP figures have for years attracted suspicion for their remarkable smoothness. Advanced economies, with all their statistical machinery, revise GDP estimates, too.
The new Indian series, with 2022-23 as its base year, attempts to incorporate a much-changed economy and newer sources of information. That is surely preferable to continuing indefinitely with an obsolete statistical map. So, the sensible question to ask is whether the 7.8% number makes sense when compared with everything else that the economy is doing. Fortunately, economic actors leave clues everywhere. Start with taxes. The monthly gross GST number has become a favourite measure of economic virility. Whenever collections cross a new threshold, ministers congratulate themselves and television anchors reach for the superlatives. But gross GST is a noisy guide. It includes taxes on imports. A surge in imports can, therefore, make the Indian economy look busier, though whether it is healthier is debatable. Refunds matter, too. A cleaner measure is GST, net of domestic refunds, divided into domestic and imports.
On that basis, the picture is less spectacular than the gross numbers suggest. After two years of double-digit growth, in 2025-26, GST growth was flat on a like-for-like basis, even though that year, GDP growth was 7.1%. Now look at the controversial June quarter of this year, when growth is claimed to have hit 7.8%. Net GST revenue grew by 7.1%, but in this, domestic GST grew by just 2.8%, whereas GST on imports was up by a massive 26%. Apart from GST, though, all other numbers of the June quarter point to solid expansion. Advance-tax payments, perhaps the most interesting of the lot, increased by 15.3%, with corporate advance tax up 16% and non-corporate payments up 12.7%.
There are other signs as well. Electricity consumption rose by 12.9%. The Purchasing Managers’ Index is in expansion territory. Most importantly, India’s perennial weak spot—exports—reported robust growth in April-July. India's total merchandise and services exports rose by 13.2% year-on-year. Merchandise exports alone rose by 17%. Any one of these numbers can mislead, but together, they seem to suggest a pattern of strong growth. Investment provides another test. Gross fixed capital formation grew by 11.9% in real terms in the April-June quarter, its fastest pace in 13 quarters. Investment accounted for 34.3% of GDP, compared with 31.4% a year earlier. The Centre's capital expenditure has risen by around 30% in the early months of the financial year.
Elephant in the Room: Consumption
What really moves the GDP needle, though, is consumption which accounts for about 63% of India’s GDP. For mass consumption to grow, income growth has to be strong. Primary income data does not show strong, broad-based mass income growth. If anything, it shows a multi-year disconnect between corporate profit growth and sluggish worker income growth. Real wages have been largely stagnant to declining for years. The Economic Survey 2025-26, citing data, shows real monthly earnings of male self-employed workers fell from ₹9,454 (2017-18) to ₹8,591 (2023-24)—a 9% real decline—and rural non-farm wage growth has been near-zero since the pandemic; agricultural wage growth is under 2% annually. Real salaried wages fell roughly 4% cumulatively from 2012-2024, even as corporate profits hit multi-year highs. This is the single biggest doubt one can raise about the 7.8% GDP growth.
India's GDP growth story will be more credible if it rests on rising wages and a gradual expansion of regular employment, especially in manufacturing, than if it rests entirely on easy credit, richer households buying more SUVs and the statistical enthusiasm generated by digital payments. Consumption ultimately requires purchasing power. If the government has to focus on creating genuine long-term growth, it has to focus on income growth from manufacturing jobs, preferably funded by large (US$80bn-US$100bn a year) foreign direct investment meant for exports. GDP growth can automatically take care of itself with or without passionate debates.
(This article first appeared in Business Standard newspaper)
So what is your conclusion regarding the headline? Is it that GDP figures are not necessarily "fake" in the sense of being deliberately fabricated, but they can be misleading because they tell an incomplete story? Or is it that the figures have been deliberately fabricated?
It is worthwhile to also monitor the Corruption Perception Index (CPI), which indicates what the name suggests. This is calculated by sampling about 180 countries around the world. Our country's 2025 rank was 39 out of 100, where zero indicates highly corrupt, while 100 indicates a highly clean country. Not a very rosy picture.
The GDP growth at 7.8% seems to be ok based on the GST collections, consumption pattern, exports and imports . But in India the informal economy is so strong and to what extend its interplay influences the formal economy is difficult to judge though it distorts the figures . It is high time the informal economy gets diligently merged with formal economy and data collection and compilation gets revamped suitably. This requires diplomacy and reforms in the area of land labour and taxes. As nothing is impossible is our belief and experience, the merger of formal economy with the fast growth and wide spread acceptance of Digital Economy along with Artificial Intelligence, can help to give a real boost to the GDP growth which can remove many of the ills of the economy as well.
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