India’s latest GDP growth figures may have settled one part of the debate, but questions over data credibility, methodology and transparency have brought the issue of trust into sharp focus.
India reported GDP growth of 7.8%, triggering a wider debate after former Finance Secretary Subhash Chandra Garg questioned how the latest figures compared with estimates under the previous GDP series. His calculation suggested that growth could have been significantly lower under a different comparison, sparking a sharp exchange among economists and former government officials.
Two former Chief Economic Advisers, Arvind Subramanian and KV Subramanian, have now offered contrasting views on the controversy. While both rejected the 2.6% growth estimate as an appropriate comparison, they differed sharply on whether the government has done enough to inspire confidence in the latest GDP data.
The debate began after questions were raised over changes to India's GDP series and the revision of earlier estimates. Garg argued that India’s first-quarter growth would have appeared much lower if calculated using the previous GDP series based on the 2011-12 base year rather than the revised methodology.
Critics argued that such a comparison involved figures derived from different methodologies and base years, making it an “apples-to-oranges” comparison.
Arvind Subramanian agreed that the 2.6% estimate was technically flawed and overstated. However, he said the controversy reflected a broader concern over the credibility and transparency of official economic data.
According to the former Chief Economic Adviser, the government may be directionally correct that economic activity is improving, but questions remain over the magnitude of the reported 7.8% GDP growth rate and the methodology behind the figures.
He said there was a wider trust deficit surrounding official data and argued that the government had a responsibility to provide greater clarity about how the latest GDP estimates were calculated and why previous estimates were revised.
The controversy intensified after an earlier GDP estimate of around Rs 86 lakh crore for the corresponding period was revised to nearly Rs 80 lakh crore under the new series.
Arvind Subramanian said there could be valid reasons for revising the figures, including the availability of better data on India's informal sector. However, he argued that the government should have made the underlying data and methodology clearer before releasing the latest growth figures.
He also questioned whether the strong GDP growth number reflected broader economic realities.
Arvind Subramanian pointed to concerns over employment growth, wage growth, private investment, foreign direct investment and the rupee, arguing that these indicators raised questions about whether the reported GDP expansion was being felt across the wider economy.
He said the government's past record on statistical and data-related issues had contributed to a situation in which economists and the public were increasingly demanding greater evidence and transparency.
KV Subramanian, however, strongly defended the latest GDP figures and dismissed the 2.6% growth estimate as “absolutely bogus”.
The former Chief Economic Adviser said the calculation involved fundamental conceptual errors because it compared figures derived from different GDP methodologies.
He compared the exercise to measuring a person's weight in pounds in one year and kilograms in another and then concluding that the person's weight had changed without properly accounting for the difference in measurement.
KV Subramanian also rejected claims that the revision of earlier GDP estimates was designed to make the latest growth rate appear stronger.
He noted that the revised methodology had been announced months before the latest GDP data was released and argued that revisions to economic statistics are a normal feature of national accounting systems across the world.
According to him, India’s rapidly changing economy makes regular revisions necessary, particularly as digital activity and the informal sector continue to evolve.
KV Subramanian said he trusted the latest GDP figures and maintained that while the exact growth rate could be slightly higher or lower than 7.8%, the Indian economy was clearly not growing at 2.6% or 5%.
He cited several economic indicators that he said supported stronger growth, including higher passenger and commercial vehicle sales, increased capital expenditure by listed companies, stronger government investment, bank credit growth, capital goods production and construction activity.
He argued that the performance of consumption and investment indicators was inconsistent with an economy growing at only 2.6%.
The two economists also disagreed over the broader question of trust in government data.
KV Subramanian challenged Arvind Subramanian's earlier criticism of India's GDP estimates and argued that previous claims of significant overestimation were not supported by subsequent revisions.
Arvind Subramanian, meanwhile, maintained that the government needed to address the underlying trust deficit by publishing detailed data, methodology and explanations for revisions.
Despite their sharp differences, both former Chief Economic Advisers agreed on one key issue: the government should provide greater clarity on the sources and methodology behind India's GDP estimates.
Arvind Subramanian called for complete transparency, while KV Subramanian said a detailed sources-and-methods document would allow independent economists to examine and verify the calculations.
The GDP controversy may therefore have moved beyond the debate over whether India grew at 7.8% or whether an alternative calculation was valid. The larger question now centres on whether greater transparency can strengthen confidence in India's official economic data.
For KV Subramanian, the latest figures remain credible and broadly supported by economic indicators. For Arvind Subramanian, improving trust will require the government to provide more detailed explanations and allow the data and methodology to withstand greater independent scrutiny.
