IMF praises India for new GDP method and calls revision a positive step

The International Monetary Fund has backed India's updated method for calculating Gross Domestic Product, calling the revision a welcome development that follows global best practices. Krishna Srinivasan, who leads the IMF's Asia and Pacific Department, told reporters in Bangkok on Thursday that the changes match the advice given by the organization's statistics department. He also praised the Ministry of Statistics and Programme Implementation for its work on improving GDP numbers and noted that India issued an explanatory note on the updates.

Economic Pressures

Mr. Srinivasan stated that India managed a major energy shock with strong economic fundamentals and reacted well to it. He explained that recent pressure on the Indian currency's exchange rate does not mean the economy is failing. Instead, he said the exchange rate moves based on global interest rates, how much risk investors are willing to take, and oil prices. The IMF's Regional Economic Outlook for Asia and Pacific, released the same day, shows India is among several emerging markets that faced currency pressure after the energy shock and stepped into foreign exchange markets.

Recent Debates

The revision follows a recent political dispute over June quarter GDP growth figures of 7.8 percent. Former Finance Secretary S.C. Garg claimed the government artificially boosted these numbers by reducing the previous year's figures, and opposition parties used this to question the data's integrity. Chief Economic Advisor V. Anantha Nageshwaran hit back at the claims, calling it cherry-picking of data. He explained that the updated numbers use the financial year ending in March 2023 as a new base and that methodological changes caused the revision of past quarterly data.

Context

GDP calculation methods are periodically updated by governments to better reflect changes in the structure of the economy over time. Support from international bodies like the IMF helps reassure global markets about the reliability of a country's official economic data during political debates.