Growth less than 2.5% in current prices: Subhash Chandra Garg stands by GDP claim

India’s 7.8% GDP growth in the first quarter has looked strong on paper, but former Finance and Economic Affairs Secretary Subhash Chandra Garg has raised questions over whether the figure fully reflects the real pace of economic growth.

In an interview with Business Today, Garg said the latest growth number needs to be examined carefully, particularly because of the way the base for comparison has changed.

‘7.8% GROWTH LOOKS VERY GOOD ON THE FACE OF IT’

Garg said the 7.8% growth recorded in the quarter looks impressive at first glance, but there are reasons to look more closely at the number.

“I think this is a serious question which we should really examine,” Garg said when asked about concerns being raised over whether the growth figure is genuine.

He pointed out that the real GDP data for the first quarter of the previous year was not available in the new series. Instead, the previous year’s figure was based on the old series.

According to Garg, this creates a problem when the current quarter’s growth is compared with that figure.

WHY THE BASE YEAR MATTERS

Garg said the number being used as the base for the first quarter of 2025-26 is a figure that has come out for the first time under the new series.

He said comparing the latest GDP growth with this base should therefore be treated with some caution.

“The better analysis is done in terms of current prices,” Garg said.

NOMINAL GDP RAISES MORE QUESTIONS

Garg also pointed to a major revision in the GDP figure at current prices for the first quarter of 2025-26.

He said the government has drastically revised the current-price GDP figure for that quarter, resulting in a nominal GDP growth rate of 10.3%.

However, Garg said that if the GDP figure released last year had been used without this revision, the growth in current prices would have been less than 2.5%.

This wide difference, according to Garg, raises questions about how much confidence should be placed in the 7.8% real GDP growth figure.

Garg said the combination of the change in the base and the sharp revision in current-price GDP has made him question whether the 7.8% growth rate is a genuine reflection of economic activity.

“These two factors give me a kind of a little bit of a doubt about whether 7.8% is genuine or not,” he said.

– Ends