Amid the ongoing discussion over the credibility of India’s latest GDP estimates, the International Monetary Fund (IMF) has backed the country’s efforts to modernise its statistical system. The global lender said the introduction of new Index of Industrial Production (IIP) and Producer Price Index (PPI) series should contribute to making GDP estimates more accurate.
Julie Kozack, Director of the IMF’s Communications Department, said the latest GDP release incorporated both new statistical measures and called their inclusion an important development in improving India’s macroeconomic data.
“The latest GDP release that we just talked about incorporated both a new index of industrial production, and a new producer price index series, and those two new series should help improve India’s GDP estimates,” Kozack said during the IMF’s monthly briefing in response to a question from PTI.
She said the IMF welcomed the steps being taken by India to modernise its macroeconomic statistics and encouraged the authorities to continue improving the country’s statistical framework and the quality of its data.
Her remarks came as India’s latest GDP figures have faced scrutiny, with some quarters questioning the methodology and data used to arrive at the estimates. The IMF’s positive assessment of the statistical changes comes as the government continues efforts to update the country’s national accounts and other economic indicators.
Kozack also highlighted the strength of India’s latest growth figures, noting that real GDP grew 7.8% in the second quarter. The growth rate was higher than both the IMF staff’s expectations and the broader consensus among economists and observers.
According to her, the stronger-than-expected performance was largely supported by robust activity in the services sector and better-than-anticipated exports.
The IMF official said the latest figures also demonstrated the resilience of the Indian economy despite the additional challenges created by rising energy prices.
“The outcome also underscores the resilience of the Indian economy, despite the energy price shock,” she said.
Since India relies heavily on crude oil imports, changes in international oil prices have significant implications for the country’s external accounts, inflation and fiscal position. Kozack noted that higher energy prices can put pressure on the balance of payments of oil-importing nations while also affecting their fiscal finances.
“In India’s case, the shock has occurred at a time when the country has been in a stronger economic position,” she said.
The IMF is continuing to evaluate the impact of elevated oil prices on India and plans to provide an updated assessment in its next set of forecasts.
“We are monitoring the effects of higher oil prices on the Indian economy and will announce our new forecasts for India in October,” Kozack said.
She added that India had so far demonstrated considerable resilience in dealing with the energy price shock.
The IMF’s assessment comes as India continues to be regarded as an important contributor to global economic growth. Kozack said the latest performance further supported the institution’s view that India remains one of the world economy’s key growth engines.
Strong services activity and export performance were identified by the IMF as major contributors to the latest quarterly growth figures.
At the same time, the IMF underlined the need for India to continue improving the quality and coverage of its economic data. Kozack urged authorities to maintain their efforts to strengthen the statistical framework, noting that better underlying indicators could make future GDP estimates more reliable.
The comments are important because GDP calculations rely on a broad range of underlying data, including industrial production, prices and activity across various sectors. Any changes to these indicators can therefore influence how real economic activity is measured.
The rollout of the new IIP and PPI series forms part of India’s wider effort to modernise its statistical infrastructure. The IMF’s support suggests that although debate over the latest GDP estimates may continue, the international institution considers the statistical reforms themselves a positive move.
For now, the IMF’s assessment remains broadly encouraging: India’s latest growth has surpassed expectations, the economy has remained resilient despite higher energy costs, and continued improvements to the statistical framework should make the measurement of economic activity more robust.
