Why India's strong GDP growth is raising eyebrows

According to Dawn, India's economy grew 7.8 per cent in the three months through June from a year earlier, beating the 7.1 per cent forecast in a Reuters poll. Government data released on Monday linked the result to an investment boom, stronger manufacturing and solid consumer demand. The figure has since drawn criticism from a former finance ministry bureaucrat and a former Reserve Bank of India chief, turning it into a wider debate.

Subhash Chandra Garg, a former top finance bureaucrat, argued that the government lowered its GDP measure for the earlier year, which made growth look bigger. Raghuram Rajan questioned why the expansion had not produced more jobs, domestic investment or foreign portfolio inflows, but later said he had neither questioned nor endorsed the figures. The statistics ministry rejected the criticism at a news conference, saying a methodology change adopted in February followed wide consultations.

Officials said the new series reduced nominal GDP for April-June 2025 to 80 trillion Indian rupees from 86.05 trillion under the old series. The government's deflator of 2.3 per cent sits below the retail inflation rate, which exceeds 4 per cent, and economists remain divided on the deflator. Other indicators, including auto sales, bank credit and tax collections, point to strength, while the Purchasing Managers' Index has slipped to multiyear lows.