Using alternative methods and revised data sources, the authors estimate that India’s gross domestic product (GDP) growth between 2005 and 2011 was underestimated by roughly 1 to 1.5 percentage points a year. In contrast, growth from 2012 to 2023 may have been overestimated by about 1.5 to 2 percentage points annually. If these adjustments are applied, the narrative of India’s economic performance changes significantly. Instead of steady high growth over two decades, the economy appears to have boomed strongly in the mid-2000s and slowed considerably after the global financial crisis, the paper argues.
Slower Growth than Reported
The authors estimate that from 2011 to 2023 the economy actually grew at around 4%–4.5% a year, compared with the roughly 6% annual growth reported in official data. The difference stems from two methodological problems in India’s GDP calculation system introduced in 2015, the paper says.
First, the official methodology relied heavily on data from the formal corporate sector to estimate activity in the vast informal economy, which accounts for roughly 44% of India’s gross value added. This approach became problematic after a series of economic shocks—including demonetisation in 2016, the rollout of the goods and services tax (GST), and the COVID-19 pandemic—which disproportionately hurt small informal businesses.
While formal firms recovered relatively quickly, many smaller enterprises struggled or shut down. Yet the GDP methodology effectively assumed that the informal sector was growing at the same pace as the formal economy, the researchers argue.
The survey data cited in the study suggests that after 2015, revenue in the formal sector grew at around 10% annually, while informal sector revenues expanded by only about 6.8%, creating a widening gap between the two.
Deflators and Oil Prices
The second problem lies in the price indices used to convert nominal output into ‘real’ GDP. Under the 2015 methodology, many sectors relied on wholesale price index (WPI)-based deflators, which are heavily influenced by commodity prices, particularly oil.
Between 2011 and 2025, however, WPI inflation was on average about 2.2 percentage points lower than consumer price inflation, meaning that output prices may have been understated when calculating real growth.
This difference tends to inflate estimates of real GDP growth, because lower deflators make inflation-adjusted output appear larger than it actually is.
The study finds a strong correlation between the gap in consumer and wholesale price indices and discrepancies between GDP growth and other economic indicators, including corporate sales.
Data Divergence
The researchers also point to a broader puzzle: after 2011, GDP growth appeared to diverge sharply from several widely used economic indicators. Exports, bank credit, industrial production, tax revenues and electricity consumption all showed a sharp slowdown after the mid-2000s boom. Yet, official GDP data suggested the economy continued to expand at a similar pace.
For example, real bank credit growth fell from about 15.6% a year during 2005–2011 to around 5.6% in the following period, while industrial production growth slowed dramatically as well. Such divergences led many economists to question whether the growth figures fully captured changes in economic activity.
Economy Smaller than Estimated
Applying their revised methodology, the authors estimate that India’s real GDP level may be around 22% lower than official figures suggest, while real consumption could be overstated by about 31%. That would imply that the average standard of living is somewhat lower than official data indicates.
The researchers stress that their estimates are preliminary and meant to provide a benchmark rather than a definitive correction. India introduced a new revision to its national accounts methodology in February 2026, partly to address some of the concerns identified in the paper. Still, the findings highlight the importance of accurate economic measurement, the authors say.
If growth statistics give policy-makers and businesses an overly optimistic picture of the economy, they risk misjudging demand, investment prospects and monetary policy needs. “For policymakers, businesses and households alike, getting GDP numbers right is critically important,” the paper concludes.
