Summary
The IMF's 'C' grade has revived suspicions that India's blistering growth is too good to be true. But this isn't about inflated numbers, it's about our statistical apparatus falling behind changes in the economy. India might even be growing faster than the numbers indicate.
Every quarter's gross domestic product (GDP) data release cycle sees a familiar question resurface: Can we trust India's GDP numbers? The question has been raised often enough to become a ritual. This time, attention was also drawn to the grading embedded in the latest International Monetary Fund (IMF) Article IV assessment of India, with the economy's 8.2% growth in the second quarter of 2025-26 placed in contrast with the 'C' rating assigned to our national accounts statistics.
This rating has been picked up by many to cast doubts on the validity of India's growth numbers and hint at inflated figures. Opinions on India's economic reality cite the IMF's C grade as evidence of a disparity between what the data suggests and what pundits believe is the lived experience of the average Indian. However, delving into the actual assessment reveals a degree of nuance that is often missed by critics.
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The IMF's scorecard is not accusing India of inflating its numbers; it is signalling that our statistical machinery hasn't fully kept pace with the structure of the modern economy. In other words, the concern is less about credibility and more about completeness. And that has consequences for how we interpret the readings.
Driven by a host of structural reforms, incentive programmes, targeted welfare schemes and a rapid push to scale digital as well as physical infrastructure, the Indian economy today is markedly different from what it was a decade ago. A large part of growth comes from sectors that do not fit neatly into legacy statistical frameworks.
The evolution of digital services, platform work, new types of software-as-a-service exports, medium- and high-tech manufacturing, informal retail and new consumption patterns, which are now layered with formal digital payment rails, no longer map cleanly onto traditional survey designs.
This has contributed to the 'discrepancies' that critics point to. When the composition of the economy shifts faster than the instruments used to track it, limitations in measurement are inevitable. However, it would be flawed to argue that the current numbers are biased upwards, as experiences from other developing countries favour different odds.
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In most developing economies with large informal sectors, rapid technological change, incomplete data reporting and mismeasurement usually results in an underestimation of GDP. India fits that profile. A significant portion of the workforce remains engaged in informal activities. A portion of activity that is getting digitized may not be getting captured. Also, household-level economic activity is rising and evolving faster than survey frameworks can document. A recalibration of base-year weights in line with the new economic structure is currently underway.
For now, that means our current GDP estimates may not fully reflect the breadth of new economic activity. This isn't an abstract theoretical consideration. Other countries have already lived through this phenomenon. In Ghana, for example, a major statistical overhaul in 2010 changed the base year and expanded coverage, resulting in an increase in the size of the economy after the revision.
The World Bank flagged the revision as a clear example of how outdated methods distort economic reality: the 'new' economy was not new; it was simply previously unmeasured. In Kenya, rebasing revealed that the economy was bigger than previously thought.
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Similarly, Asian economies that conducted frequent rebasing, such as Bangladesh, China, Hong Kong, Indonesia and Malaysia, saw their economic data keep pace with the evolving dynamics of their economies. When informal activity is widespread, sectors evolve quickly, the data architecture lags behind the economy and outdated national accounts are therefore more likely to understate reality until a methodological overhaul plugs gaps in activity recognition.
This is precisely the tone reflected in IMF's diagnosis of India's national accounts statistics. Its language is about coverage gaps, classification alignment and framework modernization, not credibility concerns. Other metrics such as fast-growing rural consumption, rising discretionary spending (particularly lifestyle purchases) and increases in durable consumption even among the bottom 40% of households point to a higher standard of living today than a decade ago. This would not be the case if our GDP numbers were simple overestimations.
So, what does all this mean for the debate on India's growth numbers? Our fundamentals have shown resilience despite the uncertainties that have loomed in the past two years. A GDP rebasing would ensure that the statistical framework reflects the economy as it operates today. When external observers assume overstatement or manipulation, the vocabulary shifts to transparency and trust, which isn't the case here.
The lived economy has moved first; the statistical system is catching up. The gap between the two is being misread as evidence of exaggeration rather than evidence of structural change. India's growth story does not rest on creative accounting, and that distinction matters.
These are the author's personal views.
The author is a consultant, department of economic affairs, ministry of finance.