Economist Neelkanth Mishra on Thursday hit back at claims that India’s latest GDP growth number was inflated by the revision of the national accounts series, calling such arguments “ill-educated and egregiously wrong” and saying economic activity indicators point to a stronger economy.
Mishra, who recently moved from Axis Bank to the World Bank as an executive director, said fading fiscal headwinds and improving credit growth were turning into tailwinds for the economy. He said the improvement in momentum could push consensus estimates for India’s trend growth rate to above 7%.
“As expected, with the fiscal headwinds fading and monetary headwinds (falling credit growth till 1HFY26) becoming tailwinds (credit growth accelerating), GDP growth is surprising on the upside, and should help push up consensus trend-growth estimates to 7%-plus,” Mishra said in a post on X.
“That is, with a neutral fiscal and monetary policy, the economy should still register 7.5% growth,” he added.
The debate intensified after the new national accounts series revised the previous year’s current-price GDP estimate from about ₹86 lakh crore to ₹80 lakh crore, prompting claims that the lower base had mechanically made the latest growth rate look stronger. The government rejected that argument, saying the change reflected the shift to the new GDP series, improved data sources and methodological changes.
Mishra took particular exception to arguments that the June 2026 growth rate would have been substantially lower had the original June 2025 base been retained.
“In this light, I was shocked to see the ill-educated and egregiously wrong claims made by some that if the 'original' base of June-2025 quarter was used, growth in the June-2026 quarter would be much lower,” he said.
He said the new GDP series, introduced in February 2026, had improved both the underlying data and methodology.
“The new series introduced in Feb-2026 cleaned up the data and also significantly improved the methodology,” Mishra said.
He added that the downward revision to the base was already known in March and pointed to an Axis Capital research note published on March 1. According to Mishra, the note had acknowledged that the new series increased the credibility of real-output estimates.
Mishra said the strength of the economy was visible in high-frequency indicators that are difficult to manipulate.
“While June-quarter data was strong, that momentum has picked up,” he said.
He pointed to personal vehicle dispatches, saying cars and SUVs grew 35% year-on-year in August, despite exports rising only 9%. Two-wheeler growth had crossed 20%, although he noted that exports had contributed to the increase.
Commercial vehicle dispatches, he said, grew by more than 40%.
Mishra also highlighted tax collections and credit growth as evidence of improving economic activity.
“tax collection growth has picked up meaningfully. This is as real as it gets,” he said.
On bank credit, Mishra said the acceleration was particularly significant because weak credit growth had previously been seen largely as a demand-side problem.
“Credit growth continues to surprise on the upside (albeit on a low base). Last year most believed the then-weak credit growth was a demand problem, whereas we steadfastly stated it was a supply issue - it has for now been addressed,” he said.
Mishra also pointed to robust construction indicators as evidence that private investment activity was strengthening.
“Hopefully, now there will be fewer people asking ‘why private sector investment is weak,’ given that there is clear evidence of investments,” he said.
However, he cautioned that the economy still had some slack, reflected in weak real-wage growth.
“It may take several quarters of above-trend growth for that slack to tighten, and bring back sticky inflation pressures,” Mishra said.
The government has argued that the revised GDP series provides a more accurate picture of economic activity, citing improved data sources, a new methodology and greater use of granular price data.
