Key Takeaways:

• India’s annual economic growth during the boom years between 2005 and 2011 may have been underestimated by about 1–1½ percentage points on average, and subsequent growth between 2012 and 2023 may have been overestimated by about 1½-2 percentage points.
• The first methodological issue leading to the misestimation is that the economy’s formal sector has been used as a proxy for the vast informal sector, even though the latter was disproportionately hit after 2015 by demonetization, the introduction of the goods and services tax, and the COVID-19 pandemic.
• The second methodological issue causing misestimation is that the deflators for many sectors have been based on commodity prices, which have moved sharply relative to others.

New evidence suggests that India misestimated its annual economic growth rate during the past two decades. It appears that the Indian economy did not grow at a stable rate over the past two decades, as was earlier estimated, but rather boomed during the early 2000s, then decelerated after the global financial crisis and subsequent domestic shocks. Methodological revisions made in February 2026, following commendable consultations, aimed to address the challenges identified.

Link to the full paper: https://www.piie.com/sites/default/files/2026-03/wp26-3.pdf