Invest1 publisher3 min readPublished
Splicing two base years turns India's 10.3 per cent nominal GDP growth into 2.6 per cent
India reported 7.8 per cent real growth for the June quarter on a base year newly moved to 2022-23. The former finance secretary who calls the nominal rate 2.6 per cent gets there by comparing levels across two different bases.
The Investor · Invest desk
What happened
- India's government said on August 31, 2026 that GDP grew 7.8 per cent in the first quarter of financial year 2026-27, quicker than the 6.9 per cent recorded in the same quarter of 2025-26.
- That quarterly report was produced with the base year changed to 2022-23, replacing the 2011-12 base that had itself been introduced in the contested 2015 methodology revision.
- On September 1, Congress general secretary Jairam Ramesh said the government's claim of robust growth, amplified through what he described as statistical "jugglery", was at odds with conditions on the ground.
Compiled by The InvestorSomething wrong?How this is made
Why it matters
- constraint A rebasing breaks the year-on-year comparison every India model runs on, so anyone using FY2026-27 quarterly data has to rebuild the FY2025-26 comparator before the two can sit in the same column.
- contradiction Two official bodies published figures for the second UPA term a full percentage point apart in the same year, which means the choice of which official source to cite is itself an allocation input.
- precedent Every base-year change since 2015 has been fought over in public, so the 2022-23 series should be expected to carry a political dispute for as long as it is the current base.
- exposure Investors holding India on the strength of the growth print are exposed to a dispute they cannot settle from published data, with the contested figures running between 7.8 per cent and zero real growth.
Saurabh Garg's 2.6 per cent and the official 10.3 per cent measure different distances. The official rate is growth inside one series. Garg's is the gap between a first-quarter 2025 level published on the 2011-12 base and the corresponding 2026 level published on the 2022-23 base [5][7]. Divide 1.026 by 1.103 and the answer is 0.930, so his splice implies the new base sets the quarterly level about 7 per cent below where the old base set it [2].
That implied 7 per cent is the argument, and no figure for it appears anywhere in the exchange. The Hindu describes the replies from the Ministries of Statistics and Programme Implementation and Finance as appearing to be technically defensible [9]. Garg is unmoved. "The response on the issue of GDP reduction is only officialese and obfuscatory. It sheds no light," he told the paper [10].
Both sides are working with roughly the same price change. Real growth of 7.8 per cent on nominal growth of 10.3 per cent implies a deflator near 2.3 per cent [3], and Garg assumes 2 to 2.5 per cent inflation, which he applies to his 2.6 per cent to get zero real growth [6].
Narendra Modi called the number "a herculean feat" in a post on X [3]. The Chief Economic Adviser, V. Anantha Nageswaran, said the key message was that "we are witnessing continued resilience in the Indian growth performance", and said high-frequency indicators backed it up [4].
The pattern has a decade behind it. The 2015 revision moved the base from 2004-05 to 2011-12, brought in the Corporate Affairs Ministry's MCA-21 database and replaced factor cost with market rates [11]. Applied backwards in 2018, it put the UPA years at an average 6.7 per cent against the 8.7 per cent the older method gave the first of those two terms, a cut of two full percentage points [12][4], while the Modi government's first four years came in at 7.35 per cent, 0.65 above the revised UPA average [13][6]. Arun Jaitley, then finance minister, said "The CSO is a highly credible organisation; it maintains an arm's-length distance from the Finance Ministry." [16] P. Chidambaram said the numbers were "the result of a hatchet job" [15]. A third row followed in 2019 over what Arvind Subramanian, Chief Economic Adviser from October 2014 to June 2018, said about growth from 2011-12 to 2016-17 [17].
On the numbers published, Garg's 2.6 per cent does not show the 7.8 per cent is wrong; it shows what happens when you subtract across a rebasing. The counter-thesis is about track record, and it is the stronger one for an allocator: a series whose backward revisions have moved a predecessor government's average down by two points is a series you hold at a discount even when each individual revision is defensible [4]. What would settle the current case is a dual-base overlap: the same quarters priced on both the 2011-12 and 2022-23 bases. If the level revision comes out near 7 per cent, Garg has measured a rebasing and the growth print stands.
What to watch
- The Q2 FY2026-27 print, and whether the year-earlier comparator is restated on the 2022-23 base or carried over from the old one.
- Whether the high-frequency indicators the Chief Economic Adviser cited are published in a form that can be checked against the national accounts.
- Whether Garg's allegation moves from newspaper interviews into a parliamentary or National Statistical Commission proceeding.