Rejecting all the criticism of India’s latest GDP numbers, Neelkanth Mishra, Executive Director, World Bank for India, said that claims questioning the 7.8% growth figure are “obviously wrong”. And further argued that the new GDP series has significantly improved the methodology and credibility of India’s economic growth estimates.
Mishra dismissed claims that GDP growth would have been significantly lower if the original base for June 2025 had been used, saying the downward revision to the base was already known in March.
According to Mishra, the new GDP series has, in fact, improved the credibility of estimates of real output.
He also cited several hard-to-manipulate indicators showing that economic momentum has strengthened since the June quarter. For example:
- Personal vehicle dispatches, including cars and SUVs, grew 35% year-on-year in August, despite exports growing by just 9%. Two-wheeler growth was also above 20% (although this was helped by strong exports).
- On the investment side, commercial vehicle dispatches grew by more than 40%
- Mishra also pointed to a meaningful pickup in tax collection growth, calling tax collections a particularly strong indicator of economic activity. “Credit growth continues to surprise on the upside (albeit on a low base),” he said. Contrary to the view that weak demand held back credit growth last year, Mishra said the issue was supply-related and has “for now been addressed.”
- He also said indicators of construction activity remain robust.
Mishra said the combination of stronger vehicle sales, credit growth, tax collections and construction activity should also reduce questions over weak private-sector investment, as there is now “clear evidence of investments.”
However, he said there is still some slack in the economy, reflected in weak real-wage growth. It may take several quarters of above-trend growth for this slack to tighten and bring back sticky inflation pressures, he added.
Mishra sees 7.5% growth even with neutral policy
Mishra pointed out that India’s economic growth can remain at around 7.5 per cent even with neutral fiscal and monetary policy, as accelerating credit growth and strong economic activity are supporting the recovery
“As expected, with the fiscal headwinds fading and monetary headwinds (falling credit growth till 1HFY26) becoming tailwinds (credit growth accelerating), GDP growth is surprising on the upside, and should help push up consensus trend-growth estimates to 7 per cent-plus,” Mishra said.
He said that with a neutral fiscal and monetary policy, the economy should still register 7.5 per cent growth.
According to data released by the Ministry of Statistics and Programme Implementation (MoSPI), India’s real GDP grew 7.8 per cent year-on-year in Q1 FY27. Real GDP at constant prices was estimated at ₹81.36 lakh crore, compared with ₹75.46 lakh crore in the same quarter of FY26. Nominal GDP grew 10.3 per cent year-on-year.
(With inputs from ANI)