<p class="bodytext">India’s real GDP (gross domestic product) growth is being celebrated at 8.2% in the second quarter of the financial year (July-September 2025). This growth, as claimed, is being driven by the secondary sector (8.1%) and the services or tertiary sector (9.2%). Manufacturing (9.1%) and construction (7.2%) have been the key growth drivers in the secondary sector.</p>.<p class="bodytext">At the outset, these figures appear highly impressive and provide an optimistic narrative for India’s ambition to become a developed country by 2047. However, a closer look shows that the numbers may be overstated and structurally misleading, creating an illusion of stronger growth than what actually exists. </p>.Reforms begin on a negative note.<p class="bodytext">Several economists have argued that these figures are far from the actual economic growth, cautioning that the GDP data is unreliable. The quarterly estimates are based on unrealistic assumptions and poor-quality data. Reliance on the outdated base year (2011-2012) and low measured inflation does not fully reflect the current patterns of consumption and production. Moreover, the Consumer Price Index (CPI) continues to draw on the Household Consumption Expenditure Survey of 2011-2012, after the government discarded the 2017-2018 survey, citing data-quality issues, making the measure less reliable. </p>.<p class="bodytext">Secondly, the unorganised or informal sector is not fully captured, despite constituting a major share of the economy. Instead, GDP estimates rely heavily on the organised sector, which is used as a proxy for smaller sectors, thereby distorting the true picture. The model simply assumes that informal sectors grow at the same rate as the organised sector, inflating the numbers, while in reality, these sectors may be contracting.</p>.<p class="bodytext">The informal sector in India employs a larger share of the workforce. When data does not give a clear picture of the informal sector, it tends to provide misleading conclusions about the true health of the economy. This masks the problems of vulnerable sections in terms of declining real wages, which demand urgent attention from policymakers.</p>.<p class="bodytext">The data also shows discrepancies between the production and expenditure sides of GDP, suggesting inconsistencies and gaps in how economic activity is measured. Also, India lacks seasonally adjusted quarterly data, which can be used to understand trends and the drivers of such growth. Such adjustments help segregate temporary effects from real changes, making it easier to identify the real causes behind the growth. The International Monetary Fund’s ‘C’ grade for India’s national accounts reflects these weaknesses, highlighting poor data capture that undermines the reliability of both GDP and inflation figures.</p>.<p class="bodytext">A closer look at the annexure does not present a promising picture compared to 2024-25. Of the 22 listed items, nine show an increase over last year — rice, cement, telephone subscribers, sales of commercial vehicles, exports, railway net tonne-kilometres, the Index of Industrial Production (IIP) for manufacturing, IIP electricity and IIP capital goods. The remaining items show a decline in growth. Private consumption remains weak, household financial savings have fallen, along with jobless growth. An evident K-shaped recovery is seen, where the corporate and organised sector profits are surging, while the informal sector is being left behind.</p>.<p class="bodytext">Further, the 8.2% growth figure, when broken down, shows a rise in year-on-year public expenditure, contributing to a strong fiscal deficit. Reliance on the Keynesian-style government spending can be risky as it often creates assets that do not boost the economy and are hard to sustain when the fiscal deficit is high, that is, Rs 8.25 crore (52.6% of the annual target) in October 2025. The punitive 50% tariff imposed by the US has compounded the challenges of achieving the 2047 target. Between May and October 2025, shipments fell by 28.5%, with the steepest declines in labour‑intensive products. Thus, while GDP growth appears strong on paper, the economy remains vulnerable to such external and internal shocks, suggesting that the growth rates may be overstated. </p>.<p class="bodytext">It is evident that India’s 8.2% growth is heavily reliant on government spending and investment, while job creation remains weak and the informal sector undercounted. The new base year 2022-23, which will be released in February 2026 by the Ministry of Statistics and Programme Implementation (MoSPI), is likely to provide a more realistic picture. However, this will be considered from Q3 of 2026-27 and will capture structural shifts of the gig economy, digital payments and services, while also expanding the CPI basket. This shift will likely show actual growth rates lower than reported, underscoring the need for caution before celebrating the figures.</p>.<p class="bodytext">(Subhashree is an Assistant Professor; Shambhuraje is a student, Department of <br />Economics, Christ deemed to be University)</p>
<p class="bodytext">India’s real GDP (gross domestic product) growth is being celebrated at 8.2% in the second quarter of the financial year (July-September 2025). This growth, as claimed, is being driven by the secondary sector (8.1%) and the services or tertiary sector (9.2%). Manufacturing (9.1%) and construction (7.2%) have been the key growth drivers in the secondary sector.</p>.<p class="bodytext">At the outset, these figures appear highly impressive and provide an optimistic narrative for India’s ambition to become a developed country by 2047. However, a closer look shows that the numbers may be overstated and structurally misleading, creating an illusion of stronger growth than what actually exists. </p>.Reforms begin on a negative note.<p class="bodytext">Several economists have argued that these figures are far from the actual economic growth, cautioning that the GDP data is unreliable. The quarterly estimates are based on unrealistic assumptions and poor-quality data. Reliance on the outdated base year (2011-2012) and low measured inflation does not fully reflect the current patterns of consumption and production. Moreover, the Consumer Price Index (CPI) continues to draw on the Household Consumption Expenditure Survey of 2011-2012, after the government discarded the 2017-2018 survey, citing data-quality issues, making the measure less reliable. </p>.<p class="bodytext">Secondly, the unorganised or informal sector is not fully captured, despite constituting a major share of the economy. Instead, GDP estimates rely heavily on the organised sector, which is used as a proxy for smaller sectors, thereby distorting the true picture. The model simply assumes that informal sectors grow at the same rate as the organised sector, inflating the numbers, while in reality, these sectors may be contracting.</p>.<p class="bodytext">The informal sector in India employs a larger share of the workforce. When data does not give a clear picture of the informal sector, it tends to provide misleading conclusions about the true health of the economy. This masks the problems of vulnerable sections in terms of declining real wages, which demand urgent attention from policymakers.</p>.<p class="bodytext">The data also shows discrepancies between the production and expenditure sides of GDP, suggesting inconsistencies and gaps in how economic activity is measured. Also, India lacks seasonally adjusted quarterly data, which can be used to understand trends and the drivers of such growth. Such adjustments help segregate temporary effects from real changes, making it easier to identify the real causes behind the growth. The International Monetary Fund’s ‘C’ grade for India’s national accounts reflects these weaknesses, highlighting poor data capture that undermines the reliability of both GDP and inflation figures.</p>.<p class="bodytext">A closer look at the annexure does not present a promising picture compared to 2024-25. Of the 22 listed items, nine show an increase over last year — rice, cement, telephone subscribers, sales of commercial vehicles, exports, railway net tonne-kilometres, the Index of Industrial Production (IIP) for manufacturing, IIP electricity and IIP capital goods. The remaining items show a decline in growth. Private consumption remains weak, household financial savings have fallen, along with jobless growth. An evident K-shaped recovery is seen, where the corporate and organised sector profits are surging, while the informal sector is being left behind.</p>.<p class="bodytext">Further, the 8.2% growth figure, when broken down, shows a rise in year-on-year public expenditure, contributing to a strong fiscal deficit. Reliance on the Keynesian-style government spending can be risky as it often creates assets that do not boost the economy and are hard to sustain when the fiscal deficit is high, that is, Rs 8.25 crore (52.6% of the annual target) in October 2025. The punitive 50% tariff imposed by the US has compounded the challenges of achieving the 2047 target. Between May and October 2025, shipments fell by 28.5%, with the steepest declines in labour‑intensive products. Thus, while GDP growth appears strong on paper, the economy remains vulnerable to such external and internal shocks, suggesting that the growth rates may be overstated. </p>.<p class="bodytext">It is evident that India’s 8.2% growth is heavily reliant on government spending and investment, while job creation remains weak and the informal sector undercounted. The new base year 2022-23, which will be released in February 2026 by the Ministry of Statistics and Programme Implementation (MoSPI), is likely to provide a more realistic picture. However, this will be considered from Q3 of 2026-27 and will capture structural shifts of the gig economy, digital payments and services, while also expanding the CPI basket. This shift will likely show actual growth rates lower than reported, underscoring the need for caution before celebrating the figures.</p>.<p class="bodytext">(Subhashree is an Assistant Professor; Shambhuraje is a student, Department of <br />Economics, Christ deemed to be University)</p>
