IMF Flags India’s GDP Data as C-Grade

SYNOPSIS

India continues to stand out as a fast-growing major economy, and the IMF’s ‘C’ grade should be seen as a constructive signal to further strengthen its statistical systems. The assessment highlights areas for improvement such as updating the GDP base year, better capturing the informal sector, and using advanced digital data sources. The government is already addressing these aspects through new surveys and high-frequency data like GST and UPI. With these upgrades, India’s growth measurement will become even more robust, reinforcing confidence in its strong economic fundamentals.

Robust growth, refined measurement focus

India has emerged as one of the world’s fastest-growing major economies, reporting GDP growth of 7.2% in FY24 and remaining above 6.5% in FY25, according to official estimates. However, in its latest assessment, the International Monetary Fund (IMF) assigned India a ‘C’ grade for GDP data quality under its Data Adequacy Assessment Framework. This rating has raised questions, not about India’s growth story, but about how accurately that growth is measured.

The IMF grades national accounts data from A (high quality) to D (poor quality).  The ‘C’ rating suggests that while data sets are largely helpful, there are discrepancies which can hamper policy analysis. Most importantly, it lays out regions in which the statistical system can certainly be upgraded, implying that there are no discrepancies in India’s GDP data. The outdated GDP base year of 2011-12 tops the list of concerns mentioned. Indeed, there have been structural transformations in India’s economy over the last decade, which include rapid digitization, growth in the service sector, platform businesses and GST, which can remain undervalued in case of the use of an outdated statistical system.

Another area of concern is the coverage of the informal sector, which still provides employment to 45 percent of the Indian labor force. Even the measurement of output in self-employment, small enterprises and agriculture is yet to be accurate. Another point raised by the IMF concerned the differences in the estimation of GDP from the production side and the expenditure side, which should in fact be more similar. Data deficits in price deflation factors, which are used to adjust nominal expansion for inflation, also exist.

The Indian government has clarified that it is not a matter of dispute over its growth rate, but some technical and statistical limitations that were expressed by IMF. These issues are also being addressed by taking a new GDP base year (2022-23), enhancing enterprise surveys and adopting high frequency high-quality digital data sources like GST and e-way bills and UPI transactions. Even under ‘C’ grade, IMF is holding that it’s a fast growing large economy compared to rest of the countries, driven by its home demand, infrastructure,and service exports. Accurate GDP information is of utmost importance to make informed and correct policies. A better data will make the growth performance of India stronger and sound. The IMF’s assessment should be viewed as a technical checkpoint, not a verdict on economic performance. In short, India’s growth engine remains solid now the focus is on ensuring the dashboard measuring it is equally precise.

Shrey Savjani