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India should adopt transparent methodologies, robust surveys, and simultaneous index updates in GDP calculations to accurately assess the true state of the economy, highlighted a report by Systematix Research.
The report stated that, to restore credibility, India must adopt transparent methodologies and the state-level data quality needs urgent improvement, along with disaggregation of capital spending between private and public sectors. It stated, "We believe that, to restore credibility, India must adopt transparent methodologies, robust surveys, and simultaneous index updates". According to the report, India's 2Q FY26 real GDP growth surprised positively at 8.2 per cent, taking the 1H FY26 average to 8.0 per cent, markedly higher than the 6.1 per cent recorded in 1H FY25. It said that manufacturing and financial services led the supply-side strength, while private consumption and investment appeared robust on paper. However, the report pointed towards a significant mismatch between the official GDP numbers and ground indicators. The report said that high-frequency indicators, corporate earnings, credit growth, tax collections, IIP, festive-season demand, and consumer durables production paint a starkly weaker picture. It highlighted that a sharp widening of "discrepancies" pushed headline growth well above the underlying "core" GDP, which slowed to a 9-quarter low of 4.1 per cent. The report mentioned that private capex likely stagnated and real consumption growth looks significantly overstated. The report added that the persistent and growing gap between official GDP numbers and ground realities, further highlighted by the IMF's recent "Grade C" rating for India's national accounts, raises serious questions about data credibility and the true state of the Indian economy. On core GDP vs discrepancies, the report stated that Core GDP (Real GDP - Discrepancies) decelerated to a 9-quarter low of 4.1 per cent in 2QFY26, indicating that discrepancies continue to dominate a significant portion of the headline growth, which are residual and unexplained components. The report said that beneath the surface, the data continues to point towards a disconnect between macro aggregates and microeconomic realities. It stated that industrial output remains subdued, urban consumption is tepid, and private investment lacks momentum. While rural demand shows modest revival, the report noted that it is largely offset by weak corporate performance, banking trends, and fiscal stress. (ANI)
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