By Ashok Gulati & Bidisha Chanda, Respectively, Distinguished Professor and Research Assistant at ICRIER
Only a few months back, President Trump called India’s economy a “dead economy”. But the GDP growth numbers for the second quarter (Q2FY26) at 8.2% not only suggest how ignorant his remarks were, but also surpassed the majority view of Indian economists. However, even as we may celebrate this, the International Monetary Fund (IMF) has quietly handed a “C” grade to the very national accounts that underpin this claim. In its staff report on India dated November 26, the Fund notes, in characteristically diplomatic language, that “the data provided to the Fund have some shortcomings but are broadly adequate for surveillance”. That should make us pause. If there are some shortcomings in data, we need to be more transparent to earn global trust in our final GDP numbers. It is important as global investors make their investment decisions based on the credibility of the information on performance of the economy, besides political stability. This transparency in data is also important to silence domestic critics who always try to paint a negative picture on the economic front.
Two questions are important when we look at India’s growth story beyond GDP numbers. First, is this growth creating enough productive jobs in the formal sector? And second, how green is this growth? These are critical questions if growth has to have any positive meaning for the masses. Let us try to dig a bit deeper.
On the jobs front, the picture is less comforting. Nearly 46% of the workforce remains engaged in agriculture (Periodic Labour Force Survey, 2023-24), and this sector has grown just by 3.5% in Q2FY26. That’s not enough to support any meaningful structural transformation, and the potential revolution in manufacturing cannot take place without mass demand coming from rural areas. For years, about 90% of India’s economy has remained informal, and this is precisely where the IMF’s comment on poor quality of data is anchored.
To be fair, the IMF’s broader view is not uniformly negative. India still receives a median “B” in its overall Data Adequacy Assessment. The friction lies specifically in the quality of data used for the National Accounts, with the Fund flagging that India’s GDP calculations continue to rely on a 2011-12 base year, now more than 13 years old, when global best practice is to update the base every five years to capture structural change. The deeper concern, however, is the persistent underestimation of the informal sector, which remains largely unregistered and outside formal statistical systems. As a result, it is chronically undercounted, leading to mismeasurement of GDP levels and its growth as well as employment trends, and welfare outcomes.
The election promises to create jobs, especially “government jobs”, remain largely unfulfilled. Even handouts in the name of M-Y (mahila or women, and youth)—be it like the `Rs 10,000 transfer to 1.5 crore Jeevika Didis in Bihar under the Mukhyamantri Mahila Rojgar Yojana or the promise of jobs for the youth—should make us pause and ask: how fiscally sustainable are these commitments, and what kind of jobs can actually be created through such schemes? What we really need is for people to move out of the farm sector, which is clearly not growing at high rates, and into the formal, organised sectors that are expanding in line with overall GDP growth and where data is better captured and credible. Only then can India earn global trust in its GDP growth numbers.
Our second question is: how green is our growth? On one hand, Prime Minister Narendra Modi articulates an ambitious green vision. On the other, IQAir, a Swiss-based air quality technology firm, has placed Delhi as the second most polluted city at this very moment. Data from AQI.in goes further: 45 of the top 50 most polluted cities globally are in India, with Delhi occupying the top spot. North India is choking, and the situation is nothing short of a gas chamber with the air quality index (AQI) going above 400 for particulate matter. This may be leading to brisk sale of air purifiers, pushing up the GDP growth numbers. But is this the type of GDP we want, where masses can’t even breathe fresh and safe air? The Air Quality Life Index (AQLI) 2025 report by the Energy Policy Institute at the University of Chicago underscores the severity of the crisis: Delhi-National Capital Region is the worst affected, with residents facing an estimated loss of 8.2 years in life expectancy based on World Health Organization standards. This is nothing short of a literal genocide, while our policymakers keep blaming each other.
Not just air, but Delhi’s groundwater also suffers from heavy metal contamination. The Central Ground Water Board’s annual report shows that Delhi has India’s highest levels of uranium, lead, nitrate, fluoride, and salinity-related indicators, posing serious long-term health risks for those relying on borewells and hand pumps. No wonder, the demand for water purifiers will also push up GDP growth!
All this brings us back to a simple but crucial point: headline numbers may shine, but having meaningful growth requires getting the fundamentals right. The first task is to generate productive, formal-sector jobs. It requires accelerating private investment, improving ease of doing business, and aligning skilling programmes with actual labour-market demand. Second, India must modernise its statistical architecture, update the GDP base year, institutionalise high-frequency economic data, and strengthen national accounts to reflect the true economy. Third, environmental sustainability can no longer remain an afterthought. Tackling air pollution calls for coordinated action across north Indian states on crop residue management, urban transport, clean energy, and industrial emissions, backed by credible monitoring systems. This has to be done at the highest level in the Prime Minister’s Office.
In short, get jobs right, get the data right, and clean up air and water—do this, and India’s growth story will shine. Anything less is more noise.