Daybreak - 7.8% growth. So why doesn't India feel richer?

Episode Date: September 15, 2026

In February this year, India announced a sweeping overhaul of how it calculates GDP, fixing a measurement system the IMF had flagged as outdated just last November. It includes a new base year, better price data, and a wider net to count the informal economy. The number seems to be getting closer to reality.But that raises a harder question. For a country that has built its global identity around being the world's fastest growing major economy, what happens when the arithmetic changes? And does any of it actually reach 1.4 billion people?Host Snigdha Sharma explores.Tune in.(This episode is a re-run. It was originally published on 26 Feb, 2026)Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

In 2017, a former governor of the Reserve Bank of India said something really important about India's economic data keeping. At the time, though, it was more like a dry observation coming from a man who had spent decades inside the system. Why We Ready, one of the most respected economists that this country has ever produced, looked at what was happening to India's official data and said, in India, not only is the future uncertain, even the past is uncertain. So they keep revising the data.

Now, almost a decade later, though, his words sound something closer to a prophecy. Because earlier this week, India announced that it is overhauling the way that it calculates GDP, the most important economic number. We will now have a new base here, new methodology and new price data. The government is saying that this is an upgrade. Now our GDP will be more accurate and more in line with how the rest of the world does it. But if the past was already uncertain, if we've been measuring ourselves with a ruler that was systematically off, then what does that mean for the story that India has been telling about itself? You know that story, the one that's been saying, we are the world's fastest growing major economy, 7%, 8%, sometimes even more. Last November, the International Monetary Fund, or IMF, looked at how India calculates the number and gave it a C, like a C in your report.

podcast. So today I thought we should try to understand what exactly was India doing wrong, what has just changed, and does any of this actually tell us how 1.4 billion people are really doing? To answer these questions, we need to go back 90 years to a 33-year-old economist sitting in America in the middle of the Great Depression trying to answer a much simpler version of the same question. How do you measure an entire economy in a single number? His answer changed the world, but he spent the rest of his life regretting it. Welcome to Daybreak, a business podcast from The Ken. I'm your host, Nickda Sharma, and I don't chase the new cycle. Instead, every day of the week, my colleague Rachel Vargheese and I will come to you with one business story that is worth

understanding and worth your time. 1934, Simon Kuznets sat down to write a report. for the United States Congress. This was when the country was in the depths of the Great Depression. A quarter of Americans were out of work, banks had collapsed, bread lines were stretched around the block, and nobody, not the government, not the Fed, not Wall Street, could say with any precision how bad things actually were, especially not in numbers.

So Cousinitz built a measure. He added up everything that the American economy produced in a single year and compressed it to a single number. The Congress loved it. Governments around the world copied it, and after the Second World War, the IMF and the World Bank made it the universal language of economic progress. During the Cold War, it actually became like a scoreboard.

But here is what almost nobody remembers. In that very first report to the Congress, the same document that introduced the measure, Cousinitz wrote that the welfare of a nation can barely be inferred from a member, measurement of national income. And then he spent the next four decades saying that GDP was being misused, that it counted the wrong things and it missed what actually mattered. He won the Nobel Prize in 1971, but by then nobody was listening to him. And this tension between what GDP measures and what we wanted to mean is exactly what caught up with India. Now, GDP sounds like

it should be simple. Add up everything that an economy produces to get a number. But the hot part isn't addition. It is inflation. Let's say, if your economy grew 10% in repeat terms, but prices also rose by 10%, your real growth is zero. So statisticians strip out inflation using something called a price deflator, which is essentially a yardstick for how much prices changed. India's yacht stick was the wrong one. It was using wholesale prices, which is the prices of goods moving between factories and suppliers rather than what consumers actually pay. In years when global commodity prices crashed, wholesale inflation fell sharply. So, when you divide nominal growth by a small deflator, real GDP looks enormous, even if nothing

on the ground has changed. Like salaries have not moved, jobs are down, but the number does not reflect this. And this is the trap that India was in. And it wasn't a secret. As far back as 2015, economists started noticing that the headline number and virtually every other economic indication, were telling different stories. Electricity consumption, real-way free, two-wheeler sales, credit growth, all of them looked sluggish. The GDP, meanwhile, was doing the opposite. The most explosive version of this critique actually came from an unlikely source. Arvin Srebrenian had been the government's own chief economic advisor from 2014 to 2018.

He is the man who wrote the economic survey, the government's flagship economic document. In 2019, months after leaving his office, he published a paper at Howard estimating that India's actual growth between 2011 and 2017 may have been around 4.5%, not the 7% being reported. He tracked 17 different economic indicators and all of them diverged from the official GDP after the 2015 methodology change. In his own words, he had raised these doubts, and I quote, frequently within government, but he needed to be outside to say it publicly. As expected, the government pushed back and hard. The Prime Minister's Economic Advisory Council issued a formal rebuttal, and the debate never really got a clean resolution.

India kept reporting 7, 8, sometimes 9% growth right up until last November when the IMF gave the methodology behind those numbers a glaring sense. So what exactly has India fixed? To find out, stay tuned till the next segment. India has focused on three things mainly. The first is the base year. Think of the base year as the reference point, which is the year whose prices you use to calculate whether the economy is actually growing

or just getting more expensive. India was still using 2011 as that reference point up until 2025. That is like navigating a city now with a big. map from 15 years ago. The whole landscape has changed since. E-commerce, GST, digital payments, the services boom and none of it was properly reflected in the ruler that we were using to measure growth. The new base year is now 2022 to 2023, which is a much more honest picture of what India's actual economy looks like today. The second change is the price deflator and this is the one that really matters. Remember the problem that we were talking about earlier?

India was stripping out inflation using wholesale prices, which is the prices between factories and distributors rather than what you and I actually pay at the shop. The new system draws on 500 to 600 items from both the consumer price index and the wholesale price data compared to about 180 items before. And this will fundamentally paint a more honest picture. Because to figure out how much of your growth is real and how much is just inflation in disguise, prices in the real world have to be tracked far more granularly. The third change is about visibility.

As we know, a huge chunk of India's economy, the chai stole, the tailor, the construction worker, are paid in cash and has been always hard to count. This informal sector is somewhere around half of the economy of the country and the old system was essentially guessing at a lot of it. The new system pulls in data from GST filings, vehicle registration records, energy consumption, which is basically a much wider net that's harder for economic activity to slip through. It also does a better job of counting things like intellectual property and digital services,

which barely existed at scale in 2011. Now, here is what the government is not telling you about up front. When you change the ruler, the old measurements change as well. India is releasing four years of back data recalculated under the new methodology. And that means some of the growth numbers that we've been citing the sevens and the eights may look different once they're recalculated. Now, whether they come out higher or lower is generally uncertain right now, and that uncertainty is uncomfortable because it means that the story India has been telling

about itself, at minimum, is going to need some editing. And that's not really scandalous. Methodological revisions happen everywhere in the world. The US does it, UK does it, but they also do. tend to do it more often, every five years or so, precisely so that the gap between the ruler and the reality never gets this wide. India waited for too long, and that decade was one of the most consequential in its economic history. But here is what really nags me. Even with all of this, the new base year, the better deflator, the wider net, we are still only fixing how we

measure the size of the economy and not whether any of it is actually reaching people. And this exactly was Kuznets' original problem with the whole thing. He built the GDP to hand it over, but he spent the next 40 years trying to explain what it could not tell you. That you could have a growing economy and a suffering population in the same country at the same time. That the number was a measure of output, not of well-being, not of whether a farmer in Vidharba is less anxious than last year this year. Not if a family in Dharavi can actually afford all the growth that is supposedly happening around them. India is now measuring its economy more honestly and I genuinely do not want to be dismissive of that. It matters. Bad data does

lead to bad policy and if your instruments are wrong, everything downstream of them is also wrong. So yes, fixing the ruler is very important. But I keep coming back to this. We have spent a better part of a decade arguing about whether the number was 4.5% or 7%. And somewhere in that argument, the more uncomfortable question got shelled. Growth for whom felt where by how many people? That is not a statistics problem. No base year revision can fix that. And until we take that question as seriously as we take the quarterly GDP numbers,

Cousnets, I think, would tell us that we have not really learned anything. at all. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the Ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleague, Snitha Sharma, and edited by Rajiv CN.