The economics behind mistrust in India’s GDP data, in 5 charts

In early April, the Union government announced India's economic growth rate for the April to June quarter at approximately 7.8%. This figure appears robust compared to historical trends. However, an unusual level of skepticism has emerged around the latest official data, contrasting with the trust previously placed in last year's data. This shift in perception may be linked to a flawed understanding of the data by a former Finance Secretary, as explained by an expert.

For years, India's GDP data has been subject to scrutiny from academics and international institutions like the International Monetary Fund. These critics argue that India often overstates its economic output. In February, the government revised the GDP series and other key data, including retail inflation, introducing new surveys to better capture the economy's performance. Despite this reform, the first quarterly GDP data under the new series has been met with skepticism.

The primary reason behind this distrust may be the discrepancy between the official growth rate and people's lived experiences. Evidence suggests that this mistrust runs deeper than the data itself.

Key factors contributing to this skepticism include:

1. Stagnant employment (Chart 1)

2. A declining labor force (Chart 2)

3. Decreasing wages (Chart 3) - The average wage rate declined by 1.5% in July, marking the fifth consecutive monthly decrease

4. Rising retail inflation (Chart 4), with food inflation spiking from around 2% in January to over 5% in July

5. Negative consumer sentiment (Chart 5)

Research by Mahesh Vyas, CEO of the Centre for Monitoring Indian Economy (CMIE), highlights that July 2026 was a tough month for Indian households. Employment remained stagnant, the labor force shrank, consumer sentiment was weak, and inflation remained above 4% for two consecutive months. The delayed monsoon and youth protests in the capital further exacerbated the situation.