The International Monetary Fund (IMF) has expressed support for India’s updated approach to calculating its gross domestic product (GDP), stating that it aligns with established statistical practices. Krishna Srinivasan, the director of the IMF’s Asia and Pacific Department, characterised the revision as a “welcome development” and highlighted that the new methodology adheres to recommendations from the IMF’s statistics division.

He made these remarks on Thursday, emphasising that the adjustments reflect the guidance provided by the IMF. Srinivasan also acknowledged that India had released a document detailing the changes made to its GDP calculation process. While he noted that there is always potential for further enhancement of statistical methods, he commended the Ministry of Statistics and Programme Implementation (MOSPI) for its efforts to bolster GDP statistics.

IMF Raises India’s GDP Growth Forecast

The IMF recently increased its GDP growth forecast for India for the fiscal year 2026-27 to 7 per cent, up from the previous estimate of 6.4 per cent made in July. This adjustment was outlined in the IMF’s World Economic Outlook report, which attributed the upward revision to stronger-than-anticipated economic momentum, resilient domestic demand, and robust activity in the services sector.

The report indicated that India is among the economies benefiting from upward revisions in their growth outlook, reflecting sustained economic momentum and enhanced growth potential. Key factors contributing to this positive outlook include favourable demographic trends, a growing domestic market, and ongoing structural reforms.

The revised forecast follows the Reserve Bank of India’s (RBI) recent monetary policy meeting, during which it also raised its GDP growth estimate for the current financial year to 7.1 per cent. Additionally, the IMF adjusted its growth forecast for India for 2027-28 by 0.3 percentage points, also projecting a rate of 7 per cent, citing the resilience of the country’s economic expansion.

Srinivasan addressed concerns regarding the pressure on India’s exchange rate due to recent energy shocks, asserting that the country has managed the situation from a position of strong fundamentals. He clarified that fluctuations in the exchange rate are influenced by various external factors, including global interest rates, investor sentiment, and oil prices. He stated that the current pressure on the currency does not indicate a disconnect from economic growth.

Political Reactions to Revised GDP Estimates

The methodology used for calculating India’s GDP has faced scrutiny following the government’s announcement of a surprising growth rate of 7.8 per cent for the June quarter. Former finance secretary S C Garg has questioned the credibility of these figures, alleging that data from the previous year was manipulated to artificially inflate the reported growth rate.

His claims have been seized upon by opposition parties, who have raised concerns about the reliability of the government’s GDP statistics. In response, Chief Economic Advisor V Anantha Nageswaran countered Garg’s assertions, labelling his approach as selective data interpretation. Nageswaran explained that the latest GDP estimates were derived using the financial year ending in March 2023 as the new base year.

The methodological changes have also led to revisions in the quarterly GDP figures for the preceding year, further complicating the discussion surrounding India’s economic performance. The IMF’s Regional Economic Outlook for Asia and the Pacific included India among emerging economies experiencing currency pressures following the energy shock, highlighting the broader context of economic challenges faced by the region.

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