IMF defends India's revised GDP calculation
The International Monetary Fund (IMF) has welcomed India's revised method of calculating gross domestic product (GDP), saying it is in line with good statistical practices and advice provided by the global lender.Krishna Srinivasan, director of the IMF's Asia and Pacific Department, described the revision as a "welcome development", noting that the updated methodology was consistent with recommendations from the IMF's statistics department."These revisions to the methodology are entirely consistent with what the advice we've been giving them, including from our statistics department," Srinivasan said on Thursday.He also pointed out that India had published a note explaining the changes to its GDP calculation process. While noting that statistical methods could always be improved further, he acknowledged the work done by the Ministry of Statistics and Programme Implementation (MOSPI) to strengthen GDP statistics.
Referring to the methodology, the director said, "In terms of GDP numbers, what they have done is consistent with good practices.
I would say there's always room for improvement, but let's recognise the good work done by MOSPI (Ministry of Statistics and Programme Implementation) for improving GDP statistics."The remarks come after the International Monetary Fund (IMF) raised India's GDP growth forecast for 2026-27 to 7% from 6.4% projected in July. In its flagship World Economic Outlook report, the IMF attributed the upward revision to stronger-than-expected economic momentum, resilient domestic demand and robust services activity.The report said that India stood out among economies receiving upward revisions to their growth outlook, reflecting sustained momentum and stronger growth potential backed by favourable demographic dynamics, an expanding domestic market and continued structural reforms.The revised projection follows the Reserve Bank of India's (RBI) latest monetary policy meeting, at which it raised its GDP growth estimate for the current financial year to 7.1%.
The IMF has also increased its growth forecast for India for 2027-28 by 0.3 percentage points to 7%, citing the durability of the country's economic expansion.
Currency pressure not a sign of weak growth: IMF
Srinivasan also addressed the pressure on India's exchange rate following the energy shock, saying the country had dealt with the disruption from a position of strong fundamentals and had responded well.He said movements in the exchange rate were influenced by several external factors, rather than being a direct reflection of domestic economic performance.The exchange rate is "a function of global interest rates, investor risk appetite, and oil prices", he said, adding that the pressure on the currency did not indicate a real disconnect with economic growth.The IMF's Regional Economic Outlook for Asia and the Pacific, included India among emerging economies that experienced currency pressure after the energy shock.
Revised GDP estimates spark political dispute
India's GDP calculation method had come under scrutiny last month after the government reported a stronger-than-expected growth rate of 7.8 per cent for the June quarter.Former finance secretary S C Garg challenged the figures, alleging that the previous year's data had been compressed to artificially inflate the reported growth rate. Opposition parties seized on his claims to question the credibility of the government's GDP numbers.Chief economic advisor V Anantha Nageswaran countered Garg's arguments, describing his approach as "cherry-picking" of data.Nageswaran explained that the latest GDP estimates had been calculated using the financial year ending in March 2023 as the new base year. The methodological changes had also resulted in revisions to the quarterly GDP figures for the previous year.