By KR Shanmugam
The International Monetary Fund (IMF) has rated India’s national account statistics as C-grade, raising questions about what the GDP numbers really mean. Ongoing reforms can enhance data accuracy & international credibility, strengthening the foundation for evidence-based policymaking, explains KR Shanmugam
What the IMF said about India’s data quality
In ITS 2025 staff report on India, the IMF assigned India a C-grade for its national accounts statistics, while awarding B-grade for prices, external statistics, government finances, and monetary and financial data. The C-grade indicates that although data exists, it suffers from deficiencies like an outdated 2011–12 base year used to calculate gross domestic product (GDP) and gross value added (GVA), reliance on the wholesale price index (WPI) instead of a comprehensive producer price index (PPI), use of single rather than double deflation, gaps between production and expenditure-side estimates, inadequate coverage of the informal sector, an outdated consumer price index (CPI) basket, and delays in publishing consolidated central and state fiscal data. These shortcomings “somewhat hamper surveillance.” While annual and quarterly revisions incorporate updated information without using any new data source to ensue strict comparison over years, base-year revisions—guided by international standards—allow conceptual improvements and the use of new data sources.
How does the IMF assign grades?
The IMF provides country-specific advice through bilateral surveillance and monitors global economic and financial developments through multilateral surveillance. These exercises assess how a country’s policies influence others through economic spill overs. As part of this process, the IMF evaluates the adequacy of official statistics using a four-tier scale to assess the adequacy of official data for economic surveillance: A (fully adequate), B (broadly adequate), C (numerous deficiencies), and D (inadequate). These grades matter because they influence global investor confidence, shape IMF risk assessments, signal the need for statistical reforms, and affect decisions by credit rating agencies, central banks, and researchers. Since national accounts is the only category where India received a low grade from the Fund, it has attracted global scrutiny.
Why is this grade concerning?
Critics argue that this grade reflects weaknesses in statistical systems, potentially diminishing confidence in GDP and fiscal numbers, influencing investment decisions, and complicating global comparisons. Shortcomings in crucial data bases may hinder evidence-based policy making and planning. Poor data on the informal sector and consumption may distort assessments of real growth, inequality, employment, and structural change.
What’s wrong with the data?
Recent trends highlight these concerns. GDP growth for 2025–26, earlier projected at 6.6%, is now likely to exceed 7%. Retail inflation fell from 4.6% in FY25 to 1.9% by October FY26. WPI inflation swung from 9.4% in FY23 to -0.7% in FY24, before rising to 2.3% in FY25 and again falling to -1.21% in October 2025, representing deflation.
These sharp movements affect the GDP deflator, meaning output growth may not be accompanied by proportionate price increases. The Centre’s gross tax revenues, meanwhile, grew by only 2.84% in April–September FY26, against 12.02% a year earlier—reflecting contractions in income tax and subdued customs and GST collections.
States face similar pressures. Lower revenues can alter GVA (GDP minus net product taxes), thereby affecting growth estimates. Continued reliance on population projections from the 2011 Census and limited availability of quarterly GSDP, investment, savings, and consumption data add further uncertainty.
In defence of growth numbers
Others argue that the IMF grade reflects technical/methodological issues, not the strength of the real economy. India’s median rating is B, similar to China and South Africa, and the IMF’s 2025 Article IV report highlights India’s strong economic performance. Despite external headwinds and the assumption of prolonged 50% US tariffs, GDP is projected to grow at 6.6% in FY26.
How to build data credibility
The government is addressing data gaps. A revised GDP series with base year 2022-23 is expected by February 2026, incorporating GST and UPI data, MCA-21 records, and broader coverage of unlisted firms and financial services. Methodological updates include aligning GDP at market prices as the primary measure and improving consistency across macro indicators such as the CPI, WPI, and IIP.
The IIP base year will also be updated to 2022–23, and the CPI to 2023–24. The next Census enumeration will begin in October 2026, and India has launched a PPI series for manufactured goods. The IMF’s C-grade, thus, is both a challenge and an opportunity. Ongoing reforms can enhance data accuracy and international credibility, strengthening the foundation for evidence-based policymaking.
With improved statistical systems and continued economic reforms, India’s growth prospects remain robust at 7–8% annually.
The writer is economic consultant to the government of Tamil Nadu