Decoding GDP Estimation: MoSPI’s Shift to Double-Deflation and PPI-Based Metrics

The Ministry of Statistics and Programme Implementation (MoSPI) has recently addressed concerns regarding the Q1 FY 2026-27 real GDP growth estimate of 7.8%. The debate, which has sparked discussions among economists and policymakers, centers on the transition to a new statistical framework. MoSPI has clarified that the perceived discrepancies arise from comparing data across disparate statistical series, which is inherently flawed due to changes in base years and calculation techniques. At the heart of this methodological shift is the adoption of the 2022-23 base year, which replaces older benchmarks to better reflect the current structure of the Indian economy. A significant technical change is the implementation of the 'double-deflation' method. Unlike the traditional single-deflation approach, which often fails to account for the varying price fluctuations of inputs and outputs separately, double-deflation adjusts both the value of output and the value of intermediate consumption by their respective price indices. By utilizing Producer Price Indices (PPI) alongside this method, MoSPI aims to provide a more granular and accurate representation of value addition across sectors.