IMF Flags Concerns Over India’s GDP Data Quality in 2025 Review

Why in the News ?

The International Monetary Fund (IMF), in its 2025 Article IV Staff Report, has once again awarded India’s national accounts—including GDP statistics—a C-grade, indicating the presence of methodological or coverage-related shortcomings that hinder effective economic surveillance.

This comes even as India reported a stronger-than-expected 8.2% GDP growth in July–September 2025, reviving long-standing debates about the credibility, consistency, and interpretation of the country’s GDP figures.

Why the IMF Assesses India’s Economic Data

Article IV Consultations

• Each year, an IMF team reviews India’s macroeconomic conditions, statistical systems, and economic policies.
• As part of this, the Fund conducts a Data Adequacy Assessment to determine whether India’s data is reliable enough to support global and domestic policymaking.

IMF’s 2025 Assessment: Key Observations

Recommendations from the IMF

The Fund called for improvements in the quality, availability, and timeliness of macroeconomic datasets. It recommended:

• Regular revision of national accounts and price indices
• Prioritising the long-delayed population census
• Timely publication of combined Centre–State fiscal data
• Enhancing coverage, consistency, and methodological clarity

India’s Response

• India argued that significant upgrades are already underway.
• New GDP and CPI series will be introduced in February 2026, which, according to India, merit a higher rating.
• However, IMF retained its earlier grades.

IMF Ratings for India (2025)

• National Accounts: C
• All Other Categories: B
• Overall Rating: B (unchanged from 2024)

What the IMF Grades Mean

• A: Fully adequate for surveillance
• B: Broadly adequate but with some gaps
• C: Noticeable shortcomings that somewhat hamper surveillance
• D: Serious issues that significantly hinder analysis

India’s C rating indicates perceived gaps in GDP coverage, methodology, and consistency, even though most other datasets are considered broadly acceptable.

How India’s Data Was Rated Before 2024

• The four-tier grading system was introduced only in 2024.
• From 2017–2023, India’s data was described as “broadly adequate”.
• In 2016, it was termed “adequate for surveillance.”

Overall Trend:

A gradual decline in confidence in statistical credibility over time.

Why 2015 Became a Key Turning Point

India updated its GDP base year in 2015 to 2011–12. The revised data:

• Produced large back-series revisions
• Covered a relatively short time period
• Displayed major discrepancies between GDP by activity and GDP by expenditure

These inconsistencies made interpretation harder and became a recurring subject of scrutiny among economists and IMF staff.

Factors Behind the IMF’s Data Downgrade

• Outdated GDP base year (2011–12)
• Reliance on Wholesale Price Index (WPI) instead of a Producer Price Index (PPI) to deflate nominal GDP
• Concerns over coverage, sampling, and reconciliation of key datasets
• Recommendations for an urgent overhaul repeatedly not enacted until recently

The use of WPI—which does not fully represent producer-level prices—has long been viewed as a methodological weakness in real GDP estimation.

What Lies Ahead for India’s Official Statistics

New GDP Series (2022–23 Base Year)

To be introduced on 27 February 2026, including:

• Updated methodologies
• New administrative and survey databases
• Contemporary sectoral weights

Initial release will include:

• Q3 2025–26 GDP
• Second Advance Estimates for FY 2025–26

Updated CPI Series

Launching on 12 February 2026, based on:

• 2023–24 Household Consumption Expenditure Survey
• 2024 as the new base year

This replaces the existing CPI series based on the 2011–12 consumption pattern.

Other Key Updates

• New Index of Industrial Production (IIP) (base 2022–23)
• Expanded and modernised datasets in multiple sectors
• Revisions to align with India’s current economic structure

More Frequent BoP Statistics

• RBI plans to shift from quarterly to monthly Balance of Payments publication.
• Enables real-time monitoring of external accounts, especially the current account balance.