Why the IMF Gave India a Low Score on Economic Data Quality

Serious Gaps in How India Tracks Growth and Public Spending, It Says

December 4, 2025

In its 2025 Data Adequacy Assessment, the International Monetary Fund (IMF) gave India a ‘C’ grade for the quality of its national accounts and government finance data. In plain terms, that means the data has enough problems to make economic analysis tricky and sometimes unreliable.

Imagine trying to judge how healthy a person is, but the only information you have is their weight from 10 years ago, vague records of what they ate last month, and no real data on their exercise, sleep or stress. That’s roughly what the IMF is saying about its efforts to evaluate the state of India’s economy today.

The IMF, like a school teacher assessing report cards, looks at how countries report data about their economies. Grade A means the country’s data is solid, timely and useful. Grade B means the data is mostly fine with a few rough edges. Grade C, which is where India sits, signals that the data has gaps or issues that get in the way of clear economic understanding.

India’s grade hasn’t changed from last year, but the IMF’s concerns remain serious, as reported by The New Indian Express.

Take the base year for GDP, for example. Think of GDP like a comparison of today’s economy with that of a reference year, say, a financial snapshot of how things were in the past. India is still using 2011–12 as its base year. That’s like trying to compare today’s smartphone market to the days of the first iPhone. The economy has changed enormously since 2011, especially with the rise of digital services, online retail and app-based work.

To know how much the economy is really growing, we need to compare it to a normal year in the past, like 2022 or 2023.

Now let’s talk about how inflation is handled in measuring GDP. When economists say “real GDP,” they mean the actual increase in goods and services, after removing the effect of rising prices. It’s like asking, “Are we making more stuff, or is everything just more expensive?” To answer that, they adjust for inflation. But India uses a tool called the Wholesale Price Index (WPI), which tracks prices of goods in bulk and doesn’t always reflect what producers really earn or spend.

What’s more, India uses a method called single deflation, which only adjusts the final price of the product. It’s like trying to find the real cost of a pizza by adjusting just the price of the flour, while ignoring the cheese, sauce, toppings, or oven costs. The better method, which is double deflation, adjusts both the cost of ingredients and the final product. That gives a much clearer picture of how much value was really added in the economy.

Another issue is the unexplained mismatch between two different ways of calculating GDP. One based on production (what’s made) and the other based on expenditure (what’s spent). In theory, these two should roughly match, like two sides of a ledger. But in India’s case, the gap between the two is often too wide, suggesting that important parts of the economy, particularly the vast informal sector or certain spending areas, aren’t being captured properly.

Also, India doesn’t publish enough detailed or seasonally adjusted data.

Imagine trying to judge a company’s performance by just looking at annual revenue without knowing which part came from its new product line, or whether a drop in one quarter was due to regular seasonal slowdown or something more serious. For India’s economy, key figures like how much different sectors are investing aren’t updated quickly, and seasonal effects like festival booms or monsoon slowdowns aren’t factored out. This makes it harder to read short-term trends with any confidence.

The same kinds of problems show up in government finance data, which also received a Grade C. One of the biggest gaps is the lack of updated consolidated data for the whole government: central, state and local. The last official numbers were for the year 2015–16, published in 2019. That’s like trying to manage a company with a head office but no real idea of what its branches are spending or borrowing. Since Indian states often borrow heavily, and local governments also spend and owe money, ignoring them paints a false picture of how deep the country’s debts really go.

Even the data that is available comes too slowly. Monthly reports from the central government and some states are current, but a combined picture across all states is published with more than a year’s delay, and even then, it comes in a limited format from the Reserve Bank of India. It’s like seeing bank statements for each family member separately, but not knowing the household’s total income and debt until the next year.

Moreover, India’s official numbers don’t fully include the finances of local bodies like municipal corporations or village councils. They also leave out something called “extrabudgetary funds,” which are pots of money kept off the books of regular budgets, sometimes used for politically sensitive projects or subsidies. Without these in the data, significant liabilities may go unnoticed.

Lastly, for consumer inflation data, India’s Consumer Price Index (CPI) still uses a consumption basket from 2011–12. That basket defines what an average Indian household consumes, and it determines how price changes are tracked. But people’s buying habits have changed since then, like spending more on mobile data, online subscriptions, and food delivery. If the CPI isn’t tracking what people actually buy today, it can misstate inflation, affecting interest rate decisions and economic policy.

India is working to fix many of these problems, IMF acknowledges. A new base year for both GDP and CPI is in the works, with updates expected in 2026. This will bring India’s economic data closer to today’s reality. If this also includes better methods for adjusting inflation and more timely, detailed data releases, future IMF assessments could see the country move up the grading scale.

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