Prime Minister Narendra Modi was quick to take to Instagram last week to boast of India’s GDP growth of 7.8%, despite global economic uncertainty caused by the US-Iran war and the spectre of inflation haunting the world. He chose Instagram to say his piece because he thinks he needs to communicate directly with India’s youth after the nationwide Gen Z protest shook the very foundations of his government. 

But Modi’s GDP pitch on Instagram seems to have backfired, as there is now a nationwide debate questioning the GDP data. The youth protest was largely about a broken education system and consequent lack of quality employment for young Indians, who are worried about their future. The PM seems to have rubbed salt in their wounds by making big claims about India’s GDP growth in the midst of an impending global economic crisis caused by the Iran conflict and trade wars.

Hyper-communication is a natural reflex for PM Modi but of late, every marketing pitch of his is getting a swift pushback. His attempt to project India’s GDP growth of 7.8% for the April-June quarter was no exception.

Former finance secretary Subhash Garg, who retired in 2019 after serving on Modi’s economic policy team, set the cat among the pigeons. Garg questioned the GDP data released for the first quarter of 2026-27 based on a new base year of 2022-23. The earlier GDP series used 2011-12 as the base year. The base year is normally updated every five years to capture changes in production and consumption patterns in the economy over time. For instance, e-commerce was not evolved in 2011 but it has changed consumption and productivity patterns in recent years.

The former finance secretary alleged that the base year change has substantially downsized the nominal GDP value for the previous year (2025-26), thus making the GDP in the current year look much better on the previous year’s lower base. Garg, however, errs in comparing the first quarter (April-June) nominal GDP of the new series with the new base year 2022-23 with that of the previous year’s quarterly GDP value, derived from the old series with base year 2011-12.

But the larger point Garg makes, that the previous years’ GDP figures have been substantially downsized without plausible explanation, is echoed by most reputed economists. Well-known economist and former Chief Statistician of India Pronab Sen told Business Standard that the new GDP series does not pass the “smell test” as there have been huge downward revisions in recent years. Sen indicates that 7-8% downward revision of nominal GDP value is quite substantial. He also says that the first quarterly GDP estimates are based on “very, very weak data”.

Essentially, Sen says that the statistical department does not publicly share its newly constructed Producer Price Index (PPI) for inputs and output, and simply says, like Sledge Hammer: “Trust us, we know what we’re doing.”

This does not establish credibility for the new data sets. The PPI is used as a deflator like in other advanced OECD economies. It has replaced the Wholesale Price Index (WPI) for the purpose of deriving real GDP from nominal GDP. But in the first estimates of quarterly GDP, the PPI index shows the deflator to be just 2.5%, which makes the real GDP 7.8% and nominal GDP 10.2%. 

This is where it fails the smell test. A deflator of 2.5% for April-June 2026 flies in the face of the severe manufacturing inflation environment across the world caused by the US-Iran war. The WPI reflects this inflationary trend at 9% but the PPI shows just 2.5%. Worse, the manufacturing PPI during this period shows a negative deflator of 1.5%, which is like saying that prices actually fell when the rest of the world was reeling from war-driven inflation. With the aid of a negative deflator, real manufacturing growth is shown at a high of 9.2%, which again severely strains a smell test.

All in all, the new GDP series is entangled in a swirl of questions which the government is under obligation to answer. As Pronab Sen suggests, the strategy of “trust us and things will be fine” won’t work for the Modi government anymore. Because the government’s historical record of maintaining data integrity is so poor that even Modi’s supporters are embarrassed. Senior economist Surjit Bhalla, who has been a staunch supporter of PM Modi and was nominated by India as Executive Director of IMF ― which was seen as a reward ― recently said in a newspaper article, “It is a truth almost universally acknowledged that the Modi government must be interrogated on the data it produces. Over the past 12 years, it has worked hard to earn this reputation.”

This just about sums up the BJP government’s callous attitude to the institutions dealing with Indian economic data. Data has often been bent, like many institutions, to suit political ends. A classic example: just before the 2019 general elections, Business Standard reported that the National Sample Survey Organisation (NSSO) had recorded unemployment at a 45-year high in 2017. This survey was suppressed by the Modi government and a cabinet minister even described the newspaper report as fake news. But after the BJP won the 2019 elections, the same NSSO data was officially released. \

Similarly, in January 2015, the BJP government overhauled its methodology for calculating GDP, which retroactively changed the growth data for fiscal year 2013-14 onwards. The change reduced GDP growth for the period in which Manmohan Singh’s UPA government was in office and sought to polish the numbers after 2013-14. This had sparked a debate over whether this was a politically motivated exercise to make the Congress-led government look bad. 

It always troubled PM Modi that growth rates were high and most economic indicators were robust during Manmohan Singh’s tenure. In his 2014 election campaign, Modi often spoke of India being listed among the Fragile Five group of world economies during the 2013 ‘taper tantrums’ caused by the US Federal Reserve, when it began to shrink its balance sheet and caused currency crises in India, Brazil, Turkey, South Africa and Indonesia. Modi never lost an opportunity to characterise India as fragile under Manmohan Singh. But to Modi’s dismay, India again found herself in similar currency crises in 2025 and 2026 as foreign inflows deserted Indian shores. 

In an article in Indian Express at the time, Surjit Bhalla characterised India as part of Fragile 2, the other one being Turkey, which is also going through a major external sector shakeout. Bhalla also asserted India was unlikely to reach its projected Viksit Bharat goals going by the present trajectory of development. I am quoting Bhalla because he was also a member of the Prime Minister’s Economic Advisory Council until 2018, before the government sent him to the IMF as Executive Director after 2019.

Even Arvind Subramanian, who was Chief Economic Advisor in the Modi 1.0 government, has raised serious doubts over data integrity in India. He has spoken of growing distrust concerning the production and management of data in India. Earlier this year, he co-authored a researched article which concluded that GDP growth may have been overestimated by 1.5-2 percentage points between 2011-12 and 2023-24 .

Conversely, GDP growth may have been underestimated by 1-1.5 percentage points from 2004-05 to 2011-12. This counters the BJP’s long-standing propaganda that growth under Modi is more robust than it was under Manmohan Singh. 

Former RBI Governor Raghuram Rajan has also said that the official GDP growth numbers do not seem to be in sync over the past decade with related metrics like growth in employment, private investment and exports. Modi’s 12 years have not seen a meaningful revival of private investment, which is the very basis of any growth in manufacturing and employment.

Arun Kumar, former economics professor at Jawaharlal Nehru University, has a simple explanation for why broadbased growth and employment never revived during the Modi regime. He says three major events — demonetisation, a badly designed GST regime and Covid-19 — created a pronounced K-shaped economy in which micro, small and medium enterprises shrank while bigger, organised businesses managed to grow. Normally, a rising tide lifts all boats, but these unique events created a two-speed economy. One reason why the GDP numbers don’t look credible at all, says Arun Kumar, is that the government uses a methodology in which organised sector growth is used as a proxy for the vast informal sector and small businesses. In a scenario where the informal sector has been shrinking, this proxy method distorts the overall picture.

The IMF has also commented on problems with the way in which India collects data on the informal sector. It relegated India’s economic data management to Grade C some time ago. Again, this hurt the credibility of India’s data. It is difficult to see how the Modi government can bridge this growing trust deficit in its data management. It is becoming an image problem both at home and overseas, and an Instagram reel is not the face lift that India needs to convince domestic and international investors and lenders to start betting on India again.