Q1 2026-27 GDP Estimates Explained: Base Year and Deflators

The Ministry of Statistics and Programme Implementation issued a backgrounder on 2 September 2026 answering the doubts raised about the first quarter of 2026-27. That quarter runs from April to June. Two changes in method explain almost every question that was asked.

A new base year

The updated annual and quarterly series was put out on 31 August 2026. Its base year is 2022-23. A base year fixes the reference prices against which real growth is measured. It is changed from time to time so that relative prices still describe the economy as it actually is. The new series also uses a fresh output Producer Price Index and a Banking Services Price Index, both with the same base year.

What double deflation does

The second change is double deflation for manufacturing. Output and intermediate consumption are deflated one by one, and real Gross Value Added is the gap between the two. The IMF treats this as the preferred way of measuring output in volume terms. Input prices rose faster than output prices during the quarter. Nominal GVA therefore grew more slowly than real GVA, and the implicit GVA deflator turned negative. Factory prices did not fall. Cotton ginning and textiles, basic metals, and rubber and plastic goods were among the activities where input prices ran ahead.

The numbers that were questioned

Agriculture is handled the other way round. Its GVA is built at constant prices first, then raised to current prices with the relevant producer price index, whose farm group rose by about 5 per cent. The implied GDP deflator is not CPI and not WPI. It is a ratio of current-price GDP to constant-price GDP, it covers the whole economy, and it is derived from more than 300 separate item-level deflators.

Why last year's figure moved

Mining shows the widest gap between real and nominal growth. Crude petroleum and natural gas prices rose 69.5 per cent in April, 72.2 per cent in May and 33.7 per cent in June. The first quarter of 2025-26 has itself been restated four times: Rs 86.05 lakh crore on 29 August 2025 under the old 2011-12 series, Rs 80.32 lakh crore once the 2022-23 series arrived, Rs 80.44 lakh crore with the provisional estimates of 5 June 2026, and Rs 80.00 lakh crore after the new IIP and PPI series were folded in. The Ministry's point is that Rs 88.27 lakh crore must be compared with Rs 80.32 lakh crore from the same series, never with the superseded Rs 86.05 lakh crore.