India’s growth claims, a clash with data reality

For years, Indians have been told to trust the headline: the fastest-growing major economy, world-beating GDP, historic momentum. But ordinary people do not live inside headlines. They live inside salaries, grocery bills, job searches, school fees and small businesses that either survive or collapse.

That is why the real question facing India is no longer whether the economy looks impressive on paper. The question is whether the paper itself can (still) be trusted.

A major new study by Abhishek Anand, Josh Felman and Arvind Subramanian argues that India’s GDP growth may have been misestimated for nearly two decades. Their analysis (“India’s 20 years of GDP misestimation: New evidence”, March 2026) suggests that growth in the post-2011 period may have been overstated by roughly 1.5 percentage points to 2 percentage points. That may sound like a technical dispute. It is not.

The impact of even minor variations

Even a two-percentage-point difference, sustained over a decade, dramatically changes the story of an economy. It affects how policymakers judge success, how investors allocate capital and how citizens evaluate their government’s performance. More importantly, the critique highlights a deeper structural problem: in an economy where most workers remain outside the formal sector, growth estimates derived largely from formal-sector data risk missing distress where most Indians actually struggle against the vagaries of policy, epidemics and uncertainties to earn their livelihoods.

The mechanics are straightforward. India increasingly relies on data from organised-sector filings to estimate activity across the broader economy. But when the formal sector is easier to measure than the informal one, the national accounts can gradually become tilted toward what is visible rather than what is actual and representative.

In a country where tens of millions work in small workshops, roadside stalls, family businesses and cash-based trade, that distinction matters enormously.

It also helps explain why the last decade has felt so puzzling to many Indians. The official narrative celebrated a high-growth miracle. Yet, private investment remained subdued, real wage growth disappointed and manufacturing never delivered the employment surge that had long been promised. Jobs remained a persistent source of anxiety, particularly for younger workers entering the labour market.

Crisis after crisis

This gap between headline growth and lived experience widened after a series of economic shocks. Demonetisation in 2016 disrupted cash-dependent sectors that dominate informal employment. The rollout of the Goods and Services Tax imposed compliance costs that smaller firms struggled to absorb. Then, the COVID-19 pandemic hit the informal economy with disproportionate force.

When growth estimates rely heavily on organised sector indicators, shocks that disproportionately damage informal activity can disappear statistically even while they reshape employment and household income.

But the deeper problem runs beyond measurement. It lies in what many economists now identify as the central contradiction of India’s current growth model.

Wealth has become increasingly concentrated in a relatively small segment of the population — particularly in large corporations and the financial elite — while the public programmes meant to protect citizens from risk and deprivation have weakened in reach or effectiveness. Growth is occurring, but its benefits are narrowing even as the economic safety net thins. In such an economy, headline GDP can continue to rise even while insecurity spreads beneath it. This is where the language of “formalisation” becomes politically convenient. Formalisation can certainly reflect genuine economic progress. But it can also mask a harsher transition: the small enterprise disappears, the large one absorbs the market, and the national accounts record the shift as efficiency.

A kirana shop closing its shutters is not necessarily a sign of national modernisation simply because a corporate chain can be counted more neatly. At this point the issue stops being purely technical and becomes democratic.

‘Inconvenient data’

If the country’s most important economic statistic is under serious doubt and debate, the natural response should be more transparency, not less. Yet, in recent years India’s statistical ecosystem has moved in the opposite direction.

The delay in the Census forced policymakers to rely on population data from 2011. The 2017-18 consumption survey was not released after it reportedly showed a decline in household spending (interestingly, this was pre-COVID-19 data). A labour force survey indicating the highest unemployment rate in decades became the centre of controversy ahead of the 2019 general election, leading to resignations from the National Statistical Commission.

Each episode can be explained individually. Taken together, they raise a broader question about how comfortable the state remains with inconvenient data.

Statistics in a democracy are not decorative achievements to be displayed in speeches. They are public infrastructure. Citizens rely on them to judge performance. Economists rely on them to design policy. Governments rely on them to detect problems before they become crises. For a country of India’s scale and ambition, credibility in economic measurement is not a luxury. It is foundational. India cannot solve unemployment with slogans, revive demand with hashtags or build investor confidence with celebratory charts. If growth is real, it should withstand scrutiny.

What India needs now is a restoration of independent statistical authority, economic indicators that reflect the lived realities of the informal workforce and the rural and urban poor, and an end to measurement shortcuts that obscure rather than illuminate the economy.

The numbers should describe the country honestly — not flatter the narrative of those in power.

Pawan Khera is Chairman, Media and Publicity, Communication Department, Indian National Congress

Published – March 28, 2026 12:08 am IST