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Rethinking India’s Growth Story

Carnegie Endowment
Carnegie Endowment•May 20, 2026

Why It Matters

Accurate GDP figures are essential for sound macro‑policy, investor confidence, and credible international standing; mis‑measurement could lead to sub‑optimal decisions across fiscal, monetary and structural reforms.

Key Takeaways

  • •India's 2005‑2011 GDP likely under‑reported by ~1.5 pp overall.
  • •Post‑2012 growth appears overstated by 1.5‑2 pp on average.
  • •Informal sector proxying skews estimates after major shocks.
  • •Outdated wholesale‑price deflators inflate service‑sector real growth figures.
  • •Revised figures could reshape policy on rates, taxes, and investment.

Summary

The podcast "Rethinking India’s Growth Story" spotlights a new working paper that argues India’s official GDP numbers have been systematically mis‑measured. Using the 2011 base‑year revision as a dividing line, the authors find that growth from 2005‑2011 was under‑stated, while the period from 2012‑2023 was overstated.

The authors trace the bias to two methodological flaws. First, the informal sector—crucial in India’s economy—is estimated by proxying formal‑sector trends, a practice that broke down after demonetisation, GST rollout and the COVID‑19 shock. Second, real‑term GDP is deflated with outdated wholesale‑price indices that track commodity and oil prices rather than consumer‑price movements, especially distorting service‑sector figures.

Abhishek Anan cites concrete evidence: macro indicators such as exports, FDI and bank credit fell sharply after 2011, yet reported GDP stayed high; demonetisation removed 85 % of cash yet nominal GDP jumped to 11 %. The paper quantifies the error—about 1.5 percentage points under‑estimation pre‑2011 and a 1.5‑2 pp over‑estimation thereafter—using government‑released informal‑sector surveys and revised price deflators.

If the revised growth path holds, policy prescriptions around exchange‑rate management, electricity tariffs and trade barriers may need recalibration, and investors will reassess risk premia. More broadly, the credibility of India’s statistical apparatus, overseen by MOSPI, faces heightened scrutiny, prompting calls for methodological overhaul and more transparent data collection.

Original Description

India’s growth numbers shape how we understand everything from jobs to investment to global standing. But what if those numbers don’t tell the full story?
New research suggests India may have both underestimated and overestimated growth at different moments over the past two decades. That insight opens the door to a broader conversation about India’s macroeconomic choices, from exchange rate policy to electricity pricing to the quiet persistence of trade barriers.
To discuss these issues and many more, Abhishek Anand joins Milan on the podcast this week. Abhishek is the Founder and Managing Director of Insignia Policy Research and a Visiting Fellow at the Madras Institute of Development Studies. He’s previously worked as an Economist at the World Bank and was a member of the Indian Economic Service, working in key positions throughout the Indian Ministry of Finance.
Together, with Arvind Subramanian and Josh Felman, Abhishek is the author of a new working paper published by the Peterson Institute for International Economics titled “India's 20 Years of GDP Misestimation: New Evidence.”
Abhishek and Milan discuss the controversy over India’s GDP estimates, important reforms within India’s statistics ministry, and the debate over the Reserve Bank of India’s policies to defend the rupee. Plus, the two discuss Abhishek’s work on power sector reform and the embrace of non-tariff barriers that stymie the spirit of India’s new bilateral trade agreements.
Episode notes:
1. Abhishek Anand, Josh Felman, and Arvind Subramanian, “India's 20 years of GDP misestimation: New evidence,” Peterson Institute of International Economics Working Paper 26-3, March 2026.
2. Abhishek Anand, Arvind Subramanian, and Josh Felman, “How GDP data misread the economy, complicated policy,” Indian Express, March 14, 2026.
3. Abhishek Anand and Naveen Thomas, “Free Trade on Paper, Protection in Practice: How India’s Policy Interventions Hollow Out Trade Liberalisation,” O.P. Jindal Global University, January 2026.
4. Abhishek Anand, Arvind Subramanian, and Josh Felman, “Going forward, RBI’s rupee policy must not repeat errors of recent history,” Indian Express, December 29, 2025.
5. Abhishek Anand, Praveen Ravi, Navneeraj Sharma, and Arvind Subramanian, “To help India’s economy, unleash the power sector,” Indian Express, August 27, 2025.
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