The Modi government is popping champagne over a glittering 7.8% GDP growth rate for the first quarter of 2026-27, attributing the surge to robust capital expenditure and a booming services sector. But former Finance Secretary Subhash Chandra Garg is calling for a reality check.
In a revealing interview on AI With Sanketthe daily show on The Federal‘s YouTube channel, Garg said the economy’s actual pulse is beating at a much more modest 4 to 5%, and that statistical sleight of hand is driving the headlines.
At the heart of Garg’s scepticism is a massive, quiet shift in the baseline. He pointed out that the government revised last year’s current-price GDP for the opening quarter from a lofty Rs 86 lakh crore down to Rs 80 lakh crore — a staggering erasure of Rs 6 lakh crore. “If you take Rs 86 lakh crore as last year’s GDP, the growth is just 2.6 per cent. But with Rs 80 lakh crore, it becomes 10.3 per cent. That changes the picture drastically,” Garg explained, adding that once you factor in inflation, the real-world expansion appears dangerously close to zero.
While he stopped short of accusing authorities of outright fraud, Garg didn’t mince words about the pattern in his interview, warning that weakening past data conveniently makes the present look stronger.
Edited excerpts:
What is your initial assessment of India’s growth story and the latest GDP figures?
I wrote a piece a couple of weeks back explaining why India is the most vulnerable economy today. While there are many reasons for India to grow, there are many concerns and vulnerabilities as well. It is better for us to take care of the vulnerabilities; otherwise, our growth will be vulnerable.
So, when this number came — 7.8 per cent — I obviously looked at it with a little bit of suspicion. Last year’s growth was also said to be 7.8 per cent in the first quarter, but it has been revised down to 6.9 per cent.
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And this confirms what I have been seeing for the last two or three years, especially after 2023-24, that there is a trend of the government revising the previous years’ data to perhaps make the current year’s growth projections look better.
For the 2025-26 first quarter, the GDP in current prices last year was stated to be Rs 86 lakh crore. But the GDP which this press release for the current year uses for the first quarter is Rs 80 lakh crore. So, Rs 86 lakh crore to Rs 80 lakh crore is a very serious reduction.
So, this year’s GDP has been revised down — by Rs 6 lakh crore in the first quarter and Rs 5 lakh crore in the second quarter. Where is that money? It is nationally important to know.
How does that Rs 6 lakh crore difference affect the reported growth rate?
We calculate GDP growth first in nominal, or current-price, terms. This year’s current-price first-quarter GDP is Rs 88 lakh crore-plus. If you take Rs 80 lakh crore for last year, then the growth which the government has put out is 10.3 per cent.
Then we take out the inflationary element from this nominal or current-price growth. The government says it is about 2.5 per cent. Now, if you then reduce the inflationary element from 2.6 per cent — that is, 2.5 per cent — you find that the real growth is close to zero.
So, it is very important to know what made the government revise the current-price GDP from Rs 86 lakh crore to Rs 80 lakh crore. Is that deliberate? Is that designed to show the current picture better than the previous year’s? Or are there some other meritorious factors?
Why is the current-price figure so important?
Current prices usually don’t change. If the balance sheet of X company told you that they produced Rs 1 lakh crore worth of goods and services last year, if you take this year’s last year number, it will still be Rs 1 lakh crore. That doesn’t change.
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So, if you compile all the data last year which led you to say that it was Rs 86 lakh crore, and then it has become Rs 80 lakh crore, what has changed?
That is a very critical, crucial question, which makes the determination of GDP so different — from 7.8 per cent to virtually zero.
Where, then, did the Rs 6 lakh crore go?
This is the question I am asking: Where did it disappear?
Could this simply be a calculation or methodological error?
At this moment, I won’t attribute that this was deliberate, but it may be deliberate that this Rs 86 lakh crore was a number which was designed at that particular time to show things in a better light.
If the revision was deliberate, does that raise questions about future GDP numbers as well?
In 2023-24, the government reduced the current-price GDP by about Rs 12 lakh crore.
What did you find when you examined the 2023-24 revisions?
For 2023-24, GDP numbers kept being revised three or four times. So, you have advanced estimates, revised estimates and final estimates.
For 2023-24, up to the third revision, which is the second revised estimate, the GDP was, let us say, X at that point of time.
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But the final one — and there were a lot of questions about that year’s GDP because that happened to be the year which was the last year of the government’s second term — was different.
Could similar revisions affect the second-quarter growth numbers?
It is interesting that the second-quarter numbers have also been revised down by Rs 5 lakh crore for 2025-26. That may look good in comparison even in the second quarter. So, this year’s GDP has been revised down — Rs 6 lakh crore in the first quarter and Rs 5 lakh crore in the second quarter. Where is that money? It is nationally important to know.
The government should put out the two tables: This is what we counted as the GDP in agriculture, industry, manufacturing, electricity, etc., and this is where the difference was. Then provide why, suppose, in the trade account or trade services there was a reduction of about, let us say, Rs 10 lakh crore.
Do you believe these revisions are being made deliberately to produce a better headline number?
I am not alleging but I have that apprehension because there was an intent to show the picture of second-term GDP because the COVID mismanagement, etc. were coming out very poorly. For five years, growth was coming very poorly and there was a definite interest in making things look better.
So, whether someone did it deliberately or someone at a lower level decided to count something wrongly, I don’t know at this stage.
Is this criticism specific to the present government, or have previous governments also been accused of manipulating economic numbers?
Jugglery of numbers is nothing new in the world economy. People do it. There are white lies, there are black lies, and there are statistics—that is a very famous saying.
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I have a very strong trust in the data collection and our statistical system built by Prasanta Chandra Mahalanobis and others. For the last many years, our statistical system has been one of the best-performing and very credible.
It may be deliberate that this Rs 86 lakh crore was a number which was designed at that particular time to show things in a better light.
But the government, when it came in in 2014, revised down the previous 10 years’ GDP, which was in the UPA period. But now this government has revised its own GDP down. To do that would mean there was something very seriously miscalculated or counted for.
Based on your analysis, is actual Q1 GDP growth really 2.6 per cent?
I don’t believe that the Indian economy is growing at zero rate of growth in real terms. It is definitely growing at least by 4–5 per cent.
But there are many reasons for being less optimistic than 8 or 9 per cent. And therefore, I think it’s very important for us to know why this adjustment had been made.
Is it normal for the government to revise GDP calculations, or is this unusual?
The normal revision, as I told you, happens four times. When you release the advance GDP numbers in January, three or two-and-a-half months before the year is closed, you are making a lot of guesses. You don’t have the data. Then you release preliminary estimates in May, when some basic data has come, still with a lot more data to come.
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So, in this system, it is absolutely normal for things to be revised down or revised up as better data becomes available.
Then why do you consider the current revision abnormal?
Because this revision is for the same current-price data. The current-price data was available for that period of time.
It has not been revised because better data has been available. It is being revised because Rs 12 lakh crore was counted extra in 2023-24 and it is being adjusted. It is a very abnormal revision.
Would you call this a Rs 6-lakh-crore scam?
No way. I don’t think you commit a statistical scam to make money. Scams are about making money by doing something wrong.
You may do it for looking better than what you are. That’s not a scam. It is a miscalculation which you have an apprehension may be done deliberately to make the numbers look good.