Author: TCA Anant
Date: September 8, 2026
India’s national accounts were rebased in February 2026, shifting the base year from 2011-12 to 2022-23. This was not a routine update. Double deflation replaced single deflation for manufacturing; a new Producer Price Index replaced the Wholesale Price Index as the main manufacturing deflator; the value added of multi-activity corporations began to be allocated across activities by actual revenue share, rather than being dumped wholesale into one dominant activity; and a proper annual survey of unincorporated enterprises replaced GST-linked proxies for estimating unorganised trade. A change of this scope, touching so many moving parts at once, was always going to draw fire. I spent the past week or so working through the four critiques that have attracted the most attention, checking each against the actual National Accounts data and other releases. This post summarises what I found. A fuller, fully documented version, with all the underlying tables, is attached as a PDF for anyone who wants to check the numbers themselves.
The first critique, from Jatinder Bedi and R. Nagaraj, argues that manufacturing value added in the new series is overstated by somewhere between 24.5% and 40.9%. Their method compares the official figure with an alternative built from factory-survey and unincorporated-enterprise data, and then tries to explain the gap by valuing the output of companies that appear in the corporate-affairs database but not in the factory survey. The trouble starts with the premise: the corporate database was always going to show far more companies than the factory survey, because it captures the full registered company rather than only factory-scale establishments, and that was precisely the point of using it in the first place. A gap between a broad-frame source and a narrow-frame source measuring the same activity is what you should expect to see, not evidence that the broader source is wrong. The exercise then converts the unexplained company count into a rupee figure using three ratios borrowed wholesale from unrelated surveys, sectors and time periods, none tested to see whether they actually transfer to the population they are applied to. Indian manufacturing has, in the meantime, been adding exactly the kind of establishment this method is bound to misread: small, highly automated precision-manufacturing outfits that clear the company-registration threshold easily with a handful of skilled engineers, while never approaching the factory survey’s employment threshold. Treating that gap as suspect, twelve years after the corporate database was adopted specifically to close it, argues against the correction using the very problem it was designed to fix. Nor does the critique engage with the fact that the new series already corrects the specific problem the 2011-12 debate identified, the tendency of a diversified company’s non-manufacturing revenue to get bundled into manufacturing GVA. That correction, which segregates multi-activity corporations by their actual filed revenue shares, is exactly what the new series introduced. The critique restates a finding from the old series without checking whether its premise still holds under the new one.
The second critique comes from Arvind Subramanian, alone and with co-authors, across three papers running from 2019 to 2026. The argument has evolved, but the method is constant: compare GDP growth against independent indicators like credit, electricity and trade, and attribute any divergence to informal-sector proxying and to deflator choices. This generates a specific, testable prediction that a re-benchmarking exercise using direct informal-sector data should mark down the household sector relative to the corporate sector. I checked this against the two years where the old and new series actually overlap, 2022-23 and 2023-24. Total value added was revised down, but by only 3.3% and 3.7%, an order of magnitude below the roughly 22% cumulative overestimation the most recent paper implies. More tellingly, the correction fell overwhelmingly on the corporate sector, not the household sector; in one of the two years the household sector was actually revised upward. That is the opposite of what the informal-sector-proxying mechanism predicts. The deflator complaints fare no better: the specific 2019 objection, single deflation, has already been replaced by double deflation in the new series, and the falling manufacturing deflator that the later papers flag as suspicious is simply the arithmetic signature of double deflation when input and output prices move apart, not an anomaly needing a separate explanation.
The third critique came not from an academic paper but from a viral social media commentary. Subhash Chandra Garg, a former finance secretary, compared nominal GDP for the same quarter across the old and new series and computed a growth rate of 2.6%, far below the official 7.8% real growth figure, and argued the new series had understated the base quarter to flatter the following year. This calculation divides a new-series number by an old-series number, which is not a valid growth rate, and it was rightly rejected almost universally. But dismissing the arithmetic doesn’t dispose of the underlying observation: the base quarter really was revised down by about 7% in current-price terms, and that deserved an explanation rather than a shrug. Working through the quarterly and annual statements, the pattern becomes clear. At the annual level, the correction is concentrated overwhelmingly in trade, repair, hotels and restaurants, which alone accounts for most or all of the net revision in both overlap years. At the quarterly level, nominal GDP is revised down by six to seven per cent in the first half of every overlap year and by almost nothing in the second half, because a large offsetting upward revision in financial, real estate and professional services shows up mainly in the second half. Garg’s chosen quarter simply happened to sit in the part of the year where the correction is largest. That is a real feature of the rebasing worth documenting properly, not evidence of manipulation.
The fourth critique, from Pronab Sen, India’s first chief statistician, is different in character: he accepts the corrected growth figure but questions the credibility of the price framework behind it. He argues that double deflation requires input-price data India may not have, that the new Producer Price Index rests on an unverifiable “trust me,” and that the country still lacks the underlying data, especially Supply and Use Tables, that would let outside researchers check the work. Each of these turns out to be overstated. The Producer Price Index is designed to cover both input and output transactions, and a new services price index extends coverage further; the data-verification problem he attributes to the new index actually predates it, since the outgoing wholesale price index already used similar producer-reported prices for manufacturing. Running the two indices side by side for an extended period before switching, which Sen says he wanted, was never realistic for a small compiling team doing sequential rather than parallel work at this scale, and in any case the comparison he says would build trust already exists: the overlap years now published let anyone line up the old and new series directly. On the negative manufacturing deflator he flags as suspicious, his own testimony cuts against him: he separately concedes that deflation can happen under double deflation in a way it cannot under single deflation, which is exactly the mechanism that explains the number he calls suspicious. And on Supply and Use Tables specifically, he is simply out of date: MOSPI released the first-ever such tables under the new base in May 2026, several months before his interview, covering 155 product groups and 67 industries and integrating the production, income and expenditure approaches. His own criterion for what would establish trust, being able to compare old and new estimates side by side, is already satisfied by the overlap years now published.
Pulling this together, the four critiques share a common shape. Each raises something genuinely worth investigating, yet none survives close comparison with the data. The true scale of the revision is far smaller and far more concentrated than any of the critiques implies: a three- to four-per-cent reduction in total value added, running mostly through one sector, trade, and mostly through the first half of the fiscal year. None of this means the analytical and explanatory work is finished; MOSPI and the academic community still have more to do. Two real gaps remain: a clearer account of how much of the trade correction comes from better direct measurement of unincorporated enterprises versus reclassification of multi-activity corporations, and an explanation of why the quarterly correction is so front-loaded. Those are the productive questions this debate should now turn to.
A note on how this piece came together, since readers sometimes ask. I used Claude extensively throughout, for drafting sections after I had worked out the arguments, for editing successive drafts down to something readable, and for a good deal of the underlying analytical work: reconciling the old and new National Accounts series across a dozen-odd spreadsheets, cross-tabulating annual and quarterly revisions by activity and institutional sector, and checking the arithmetic in each of the four critiques against the source data rather than taking it on faith. It did not replace the judgment calls about which comparisons were fair or what the evidence actually supported; that part stayed with me, and colleagues who read drafts caught things I would have missed. But it made it possible to move through a lot of spreadsheet reconciliation quickly and to keep redrafting until the argument was clear rather than merely correct. The article itself follows the Indic tradition of vada, with its components of Purvapaksha-Uttarapaksha-Siddhanta. In that spirit, I will genuinely welcome feedback, including on where the analysis might still be wrong.
