World Bank ED Neelkanth Mishra rejects 2.6% India GDP growth claim as ‘egregiously wrong’

New Delhi: World Bank Executive Director Neelkanth Mishra has strongly rejected claims that India's economy effectively grew by only 2.6 percent in the April-June quarter of FY27, rather than the officially reported 7.8 percent, calling such calculations "ill-educated" and "egregiously wrong".

Mishra's intervention comes amid a political and economic debate over the government's latest GDP numbers after former finance secretary S C Garg questioned the impact of revisions to the previous year's GDP base.

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Garg has argued that nominal GDP for the corresponding quarter of the previous year, initially estimated at around Rs 86 lakh crore, was subsequently revised down to around Rs 80 lakh crore. According to his argument, without this downward revision to the base, GDP growth in the June 2026 quarter would have been only about 2.6 percent.

Mishra disputed that interpretation, arguing that it incorrectly compares estimates compiled under different GDP series and methodologies.

“... 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,” Mishra said in a post on X.

He said the new GDP series introduced in February 2026 had not merely altered the base numbers but had also cleaned up underlying data and significantly improved the methodology used for estimating economic output.

“For those who track this for a living (and I used to be one such till 45 days ago) - the downward revision in the base was known in March… the new series increased credibility of estimates of real output,” said Mishra, who until recently served as Chief Economist at Axis Bank.

Mishra argued that the claim had already been challenged on logical and methodological grounds, but said it needed to be addressed because misleading interpretations could gain wider currency.

“That claim is so obviously wrong that several logical rebuttals have already been made. But bad information tends to travel further than good information, and so it is important to reiterate and reinforce the argument,” he said.

Without naming Garg in his post, Mishra said it was surprising that such arguments had gained traction when several independently observable indicators were pointing towards stronger economic activity.

“That such claims got traction is itself surprising, given that easy-to-track and not-possible-to-fudge indicators of economic activity have been so robust,” he said.

Mishra sees underlying growth strengthening

Beyond defending the GDP numbers, Mishra struck an upbeat note on India's growth outlook, arguing that fading fiscal headwinds and an improvement in credit growth were providing support to economic activity.

“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 percent-plus. That is, with a neutral fiscal and monetary policy, the economy should still register 7.5 percent growth,” he said.

According to Mishra, the June-quarter numbers were consistent with a broader pickup visible across several high-frequency indicators.

He pointed to vehicle dispatches, saying passenger vehicle sales — including cars and SUVs — grew 35 percent year-on-year in August despite exports rising by only 9 percent. Two-wheeler growth, he said, had crossed 20 percent, while commercial vehicle dispatches increased by more than 40 percent.

Mishra also pointed to stronger tax collections, accelerating credit growth and robust construction indicators as evidence that economic momentum had strengthened.

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“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.

He also pushed back against the recurring debate over weak private-sector capital expenditure.

“Hopefully, now there will be fewer people asking ‘why private sector investment is weak’, given that there is clear evidence of investments,” Mishra said.

Despite his bullish assessment, Mishra acknowledged that some slack remains in the economy, particularly in real wages. He said it could take several quarters of above-trend economic growth before spare capacity tightens sufficiently to revive persistent inflationary pressures.

His comments add another dimension to the controversy surrounding the latest GDP estimates: the debate is increasingly not just about the headline 7.8 percent growth rate, but about whether revisions under India's new GDP series can legitimately be used to recalculate growth by mixing numbers generated under the old and new methodologies.

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