On Monday, the last day of August as is the norm, India’s Ministry of Statistics and Programme Implementation (MoSPI) released the country’s economic output data for the first quarter (Q1 covering April, May and June) of the current financial year.At the start of this quarter, the world was in the midst of the US-Iran war, and most analysts were dialling down growth expectations, given that geopolitics was disrupting all economies around the world. India, in particular, was expected to experience slower growth because it is heavily dependent on imports from West Asia for its energy (crude oil etc.) needs.However, as the weeks went by, the data for different sectors of the economy showed that the Indian economy continued to grow at a faster-than-expected rate. By the time the quarter ended in June, most economists who track data expected a growth rate of around 7.5%. That is, the total economic output produced in the country in these three months was expected to grow by 7.5% over what it was in the same three months in 2025. Some expected the growth rate to be even higher, around 7.8%.The GDP column last week explained why the Q1 growth rate is likely to be 7.8% — far better than most expectations at the start of the quarter. It also provided reasons why one should be cautious in leaping to the conclusion that India has yet again entered a “Goldilocks” kind of optimal phase.As it turned out, the official data for Q1 showed that India’s gross domestic product (GDP) grew by 7.8% in real terms and 10.3% in nominal terms; the difference between the two types of GDP is the effect of inflation.It is crucial to understand that on February 27 this year — and this date is important to note — the MoSPI had unveiled a new series of GDP data after changing the “base year” from 2011-12 to 2022-23. Every economy undergoes base year revisions regularly. Mostly, it is done once every five years, but in the recent past the revision was long-pending. In fact, the lack of a base year revision was one big reason why India’s GDP was losing credibility.Story continues below this adA base year provides an opportunity for the government to incorporate new data sources, improve methodology, and capture data more accurately about an economy that changes substantially every five years.Also in Explained | Who is Subhash Chandra Garg, ex-Finance Secretary now criticising GDP numbers?When the Base Year was changed, the MoSPI accepted that India was overestimating its GDP in the 2011-12 series and rolled back the GDP in a significant manner. For instance, the nominal GDP for 2025-26 was rolled back from Rs 357 trillion (in the old series with 2011-12 as the base year) to Rs 345 trillion in the new series with the base year of 2022-23.The ControversyHowever, the latest GDP growth rate has become controversial after a former Finance Secretary in the Modi government, S C Garg, claimed that the government had deliberately revised down the GDP for Q1 of 2025 in order to show a good growth rate in the Q1 of 2026.In fact, he singled out the nominal GDP growth rate of 10.3% and said that if the growth rate was calculated on the basis of the Q1 GDP based on the old series (with the Base Year of 2011-12) then it would be just 2.6% growth.Story continues below this adThis is not the first time someone who has held a senior position in this government has questioned the GDP calculations. Nor is it the first time that GDP estimates have been criticised. In the past, even the International Monetary Fund has raised issues with India’s national income estimates.Garg’s claim raises two central queries:One, did the government revise down the Q1 estimates of 2025 just to show that Q1 estimates of 2026 look impressive?Two, is it correct to calculate the growth rate by taking the GDP for Q1 of 2026 from one data series and that of Q1 of 2025 from another data series?The AnswerThe short answer to both questions is no. But here’s the explanation. Table 1Table 1 provides nominal GDP data for Q1 based on the old series as well as the new series. It also provides information on the date when this data was unveiled.Story continues below this adAs can be seen from the Table, the Q1 data for 2025 was pegged at Rs 86.1 trillion in the old series of data. However, when the new series of data was unveiled on February 27, this estimate was rolled down to Rs 80.3 trillion. The date here is crucial because it is a day before the US went to war with Iran. In the months since, this estimate of Q1 2025 GDP has been revised up and down as is the case with all such estimates, but the changes are marginal.Udit Misra writes | Why West Asia war didn’t hurt India economy as much as was fearedIt is evident that the government did not arrive at the Rs 88.3 trillion GDP data for Q1 of the current year and then revised the data for Q1 of last year to arrive at a high growth rate.It is equally important to understand that the 2.6% growth rate calculation by Garg is fundamentally flawed since it uses data from two different base-year series; such data is simply not comparable because data sources and methodology are significantly different. Table 2In fact, to understand how bizarre such a calculation can look — and why Garg may not have chosen to talk about real GDP growth and only stayed with nominal GDP growth — look at TABLE 2, which does the same calculation for real GDP growth rate. By Garg’s (incorrect) method, real GDP in Q1 this year has grown by almost 70%.UpshotStory continues below this adIndia’s growth rate has become a highly polarising issue partly because it is a technically complicated estimation and partly because it is highly politicised. The matters are made worse since growth, no matter how fast, is failing to create an adequate number of good quality jobs. The growing youth unrest points to the possibility that India risks squandering its demographic dividend and turning it into a demographic bomb.No one can possibly make the case that the latest base year revision is a retrograde step. Nor can anyone argue that GDP estimation cannot be improved further.Accurate data is critical for effective policymaking, and in an economy such as India with high levels of informality and data gaps, GDP estimation can always be improved. While data accuracy must be improved, the path towards that goal cannot be via inaccurate criticism.What should the government do to improve the credibility of the GDP estimates?Story continues below this adShare your views and queries at udit.misra@expressindia.comTake care,Udit