Whilst as yet it’s too early to say how good or how inadequate is the new methodology for calculating GDP, which came into operation last month, India’s former Chief Economic Advisor, Arvind Subramanian, has pointed out that the old methodology, which came into operation in 2015, overstated GDP growth between 2011-12 and 2023-24 by 1.5-2 percentage points and between 2004-05 and 2011-12 it underestimated growth by 1-1.5 percentage points. He has identified two principal reasons for this. The first is errors and inadequacies in the way growth in the informal sector, which in this period was pretty close to 45% of the economy, was estimated. The second is the deflator. The old methodology used the wholesale price index which understated inflation and didn’t really capture prices in the services sector. So when economists would try to find answers t ...