- 7 weeks ago
India's gross domestic product registered a 7.8% growth in the April to June quarter, surpassing the Reserve Bank of India's projection of 7%.
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00:01Good evening, you're watching NewsTrack with me, Maria Shakil.
00:04India's 7.8% GDP growth has now become a political flashpoint with the government celebrating
00:11what it calls a strong economic performance, while the opposition is questioning a more
00:16fundamental issue.
00:17Is this growth actually reaching every Indian?
00:21Prime Minister Narendra Modi has described the numbers as a herculean feat, calling the
00:26opposition a jhoot ki goonj, brigade.
00:29He has accused it of spreading misinformation about India's economic performance.
00:33But for the opposition, the headline growth number raises bigger questions about jobs,
00:39incomes, and whether ordinary Indians are actually feeling the benefits of this growth.
00:44The Congress has called the government's presentation a greatly distorted picture of the economy,
00:52alleging repeated changes in methodology to flatter the number.
00:58So what do the numbers really tell us?
01:02Is India's growth story as strong and broad-based as the government claims, or are there gaps
01:07that the headline GDP figure doesn't capture?
01:11Before I bring in the 16th Finance Commission Chairperson, Dr. Arvind Panagriya, and Congress
01:17M.P. Manish Tiwari, on the show, here's a report.
01:33India's economy has delivered a stronger than expected performance.
01:38GDP grew 7.8% in April-June quarter, giving the 2026-27 financial year a strong opening.
01:52The number is significantly above the RBI's 7% forecast and keeps India ahead of several
01:59major G20 economies, and this was not growth riding on a single engine.
02:07Manufacturing expanded at 9.2%, services surged at 10%, while investment measured through gross
02:14fixed capital formation jumped 11.9%.
02:19The numbers point to broad-based momentum, even as the global economy navigates uncertainty.
02:25The chief economic advisor called it continued resilience.
02:29What we are witnessing is continued resilience in the Indian growth performance.
02:33I think that's the key message here.
02:35The quarterly real GDP numbers in general, after a slight lull towards the latter part of
02:4324-25, has picked up quite well and has weathered global uncertainties rather well.
02:50And Prime Minister Modi wasted no time in putting a political stamp on the numbers, calling
02:557.8% growth a herculean feat.
03:19But the economic headline soon became a political flashpoint.
03:23Just months ago, Rahul Gandhi had warned of an economic tsunami.
03:51Now the BJP is using the 7.8% numbers to answer that warning.
03:56Turning Rahul Gandhi's economic tsunami prediction into a political counter-attack.
04:23We are proud of the people of India, who even in these very unnerving and difficult times,
04:30with two wars raging on global uncertainty and volatility, have given India 7.8% growth in the quarter April
04:42to June 26.
05:07But the opposition is refusing to read the GDP numbers as a clean bill of economic health.
05:13Congress has called the figure a greatly distorted picture of the economy, while putting the spotlight on unemployment and whether
05:20headline growth is translating into a better deal for ordinary Indians.
05:43So 7.8% is a headline-grabbing number and a strong start to the new financial year.
05:49But the real test will be whether this growth translates into more jobs, stronger incomes and greater purchasing power for
05:58Indians.
06:00For now, the government has a number to celebrate and the opposition has a warning that the headline does not
06:06tell the whole story.
06:13And joining me now is Arvind Panagriya, 16th Finance Commission Chairman and former Vice Chair of Neeti Aayog.
06:23He's joining me from New York.
06:24Dr. Panagriya, I really appreciate your time.
06:267.8% growth against an RBI projection of 7%.
06:31As an economist, does this number genuinely reflect the strength of the underlying economy or are one-off factors doing
06:41some of the work here?
06:43So, Maria, I really think that we ought to look at the recent past going beyond the current quarter, how
06:52the economy has performed.
06:54And that is where we'll get the measure of what the underlying strength is.
07:01And if I look at the last three years, 23-24, 24-25 and 25-26, the annualized average growth
07:11rate has been about 7.3%, which is solidly good.
07:16So, you know, it's a little below 7.8%, so you can argue about that.
07:21You know, last two quarters have been 7.8% each.
07:25Maybe it is accelerating, but that remains to be seen.
07:28But I am personally quite pleased that, you know, from 7.3% average for the three years, we have
07:34gone to 7.8% rather than to 7.0%.
07:39So, from that perspective, I think it's a generally good sign.
07:43The other way to look at the strength of the economy is how the different sectors of the economy are
07:48doing.
07:48And I'm particularly pleased, actually, to see the performance of manufacturing, which has been a bit of a kind of
07:56weak spot of the Indian economy.
07:58I checked the numbers for the last three years, and the average of last three years for manufacturing growth by
08:05itself has been more than 10%, which we have never done as far as I can remember.
08:10And this particular quarter, it is 9.2%.
08:14So, it seems that, you know, on manufacturing growth, finally we may have turned a corner.
08:22I hope so.
08:23I'm keeping my fingers crossed.
08:24Okay.
08:25All in all, I think.
08:26Before I move ahead, since you're speaking about manufacturing sector, manufacturing operating profits jumped from 9.4% to 21
08:35.3% in a single quarter.
08:37This certainly is a huge jump or a surge.
08:40But private consumption, Dr. Panigriya, grew by only 7.1%.
08:45So, whose growth is it really?
08:48Right.
08:49So, look, there's always a tension between consumption and investment.
08:55If investment is going to rise, which it has risen, by the way, you know, gross fixed investment in this
09:02quarter is over 34%, which we haven't done in the last many years, actually.
09:08Then the consumption will correspondingly be a little bit tepid.
09:13Personally, I really believe that, you know, if our exports are doing well and if investment is doing well, that
09:21is a very good sign.
09:22I would rather that we save a bit, invest more, because that enhances the future productivity and future prospects of
09:32growth.
09:33People focus too much on consumption, in my personal view, because, you know, at the end of the day, the
09:41demand is open to you.
09:42The world economy is there.
09:44So, therefore, if you are really competitive, efficient, then there is no limit to the demand, because you've got the
09:52world economy there.
09:55If the domestic demand becomes tepid, go export.
09:59But you've got to compete.
10:01And so this is where I think the investment side is quite important.
10:04Yes, because, you know, this gap that is there between corporate profits and household consumption, many would say that this
10:12suggests that the growth isn't really translating into larger prosperity.
10:19No, no, Maria, look, you know, what we are looking at in the macro data is the total consumption.
10:25So we don't know when you say that whose consumption has declined.
10:31We do not know until we then, you know, unpack that number, that aggregate number.
10:37So still it's quite, I mean, you know, as a tepid growth in consumption is quite consistent with the households
10:47at the bottom still experiencing pretty healthy growth in consumption.
10:51I don't know that, I mean, I'm not saying that this is what has happened, because I don't have the
10:55number, neither do you.
10:57But we should not read from the tepid growth in overall consumption, tepid growth in consumption of the specific households.
11:06Okay.
11:06Dr. Panagriya, the government's CAPEX grew 24 percent, while state CAPEX rose just 6.8 percent.
11:14If public spending is still doing the heavy lifting, when does India actually see the private investment cycle?
11:22You have long argued that the economy certainly needs it.
11:29No, I have never understood, you know, in so many years now, I've been hearing this, the private investment is
11:37tapid, private investment is not doing its job, etc. and all.
11:40But the number we have is the gross fixed investment overall.
11:47And we know that that number actually in this quarter has gone to some 34.3 percent compared with last
11:55year's number, which was something like, you know, 31.2 percent.
11:58That's a three percentage point increase.
12:00The level also is actually quite high.
12:02Now, out of this, the public investment, taking both the union and the states together, is about 6 percent out
12:11of the 34 percent.
12:12So you've got almost 27, 28 percent private gross investment.
12:20That is pretty healthy investment, actually.
12:22Now, we don't, you know, there has always been an issue with the quality of investment in India, because a
12:28large part of our investment, almost, you know, some 14, 15 percent of the GDP has been in the household
12:34sector.
12:35And that's because, you know, we have these large number of, vast number of micro and small enterprises, which basically
12:43are financed out of the household savings.
12:46And so a large part of the household savings translates directly into this very generally what is low productivity investment.
12:53That is an issue.
12:55But gross fixed investment, I think, is not an issue, whether you look at private or public.
13:02And as former vice chairman of Neeti Aayog, I'm sure you would have seen the base year revision process from
13:08the inside.
13:09The Congress has called the present GDP numbers as some kind of statistical gymnastics, which is designed to show the
13:18government in a particular light.
13:20Walk us through it plainly.
13:22Is that a fair charge or a misreading of a technical exercise?
13:27Look, this is a political charge.
13:31Is all I can say.
13:32Because, look, you know, this is a technical matter, how the methodology works.
13:37And if any person, you know, has complaints that methodology is flawed in certain ways, certainly the MOSP would welcome
13:48the suggestions.
13:49This is a process that's generally open.
13:53Anybody can make their suggestions.
13:55And India's top statisticians generally are involved in working out the methodology.
14:02So, you know, and by the way, one should also understand that, you know, faking GDP level, maybe you can
14:10do.
14:11But faking growth is a very difficult task because, you know, today you fake and exaggerate your growth by two
14:17percentage points.
14:18Tomorrow, that two percent, extra two percentage points goes into the base of calculating the growth rate for the following
14:25year.
14:26And that is going to, so unless you are faking by two percent this year, four percent next year, six
14:32percent next year, you can't go on with that kind of process.
14:35So, and in my experience at NITI.io from within, this was never an issue with the government, you know,
14:44government will simply be told what the numbers are.
14:47And usually, you know, on the day that the MOSPY releases numbers, I will get to know a little bit
14:53earlier.
14:55And government would be told about the same time.
14:59So, it is always MOSPY's call.
15:01And then MOSPY holds the press conference to give out the numbers to the journalists and the public at large.
15:09Okay.
15:09Since you have spent years studying India's growth story closely, critics, including former chief statisticians, argue that the GDP deflator
15:20has been running too low, artificially inflating the real growth numbers.
15:26So, can you explain this to us?
15:29So, look, you know, basically what they are saying is that the nominal growth and real growth difference is small.
15:39And which is a fair point.
15:41But in the end, you know, the numbers are what they are.
15:46So, if there are, you know, rather than making that charge, it would be helpful if the government is told
15:57that, look, these are the problems and fix those problems.
16:01But, you know, just saying that just because the numbers turn out that way, therefore somehow something crazy is going
16:10on in there is not sufficient.
16:12It doesn't help anyway.
16:15I mean, we know, for example, that the WPI, the wholesale price index in India, fluctuates dramatically.
16:23You know, there were times it has gone into negative territory.
16:29And so, you know, what is the fix for it?
16:32I do not know.
16:33I think, you know, the statisticians have to suggest that.
16:37But just saying that because the observed difference between the real GDP growth and the nominal growth happens to be
16:45low, therefore there is a problem, that doesn't fly with me.
16:48I'm sorry.
16:49Oh, yeah.
16:50But, Dr. Panagriya, you know, there are certain figures which the opposition is quoting.
16:56And they are saying that the inflation numbers, that is, the retail inflation, is at a 19-month high.
17:03So, if there is an unbearable price rise, which they are calling the three U's of the current GDP numbers,
17:12you know, the Congress President himself spoke about it.
17:15He says the three U's are unemployment, unbearable price rise, and unbridled inequality.
17:21So, what kind of economy success or, you know, the great picture that we are seeing, if there is a
17:28rising inequality and the gap between the haves and the have-nots are increasing?
17:33How do you look at this criticism?
17:35Yeah, I'm sorry.
17:37This is not based in any empirical data, actually.
17:40You know, whatever salience of that conclusion, that statement, that announcement, maybe, it's not grounded in the data.
17:52I've checked the retail inflation, the consumer price index inflation, over the last three years.
17:59I'm talking of 23, 24, 24, 25, 25, 26.
18:02Those three years have been 4.3%.
18:04That has been our average CPI inflation.
18:10So, that I don't see.
18:12If I look at the poverty figures, there has been a dramatic decline.
18:16I mean, I have myself done because the survey, the expenditure survey is done by MOSFET.
18:22But I did the numbers.
18:23They, you know, they do the survey and they report the unit level, household level figures.
18:28But I did the calculations of poverty and poverty has dramatically gone down, you know, compared, if you compare 11,
18:3512 a year, which was the last survey after that, 23, 24.
18:39There have been two, 22, 23 and 23, 24.
18:41Both 22, 23 and 23, 24, expenditure surveys show dramatic decline in poverty, which obviously tells me that the household
18:50incomes at the bottom are, in fact, doing quite well.
18:54And I can also see by my eyes.
18:55I was at Niti Aayog a little more than 10 years ago.
19:00And I have recently been for two years at the Finance Commission.
19:05And I visited every single state, including Bihar and UP.
19:08And you can see the dramatic difference, actually, in the lives of the people, like, by and large, you know.
19:14And it's not like I've gone only to the five-star hotels.
19:18I mean, I've met all the panchayats and representatives of the panchayats.
19:22We have visited a number of panchayats and all.
19:26The signs of prosperity at all levels most definitely are there.
19:32Okay, let me ask you my final question.
19:35And this is with regards to because you have had a ringside view of the government.
19:39And also now that you are in New York, you are able to have, you know, a zoomed out view
19:45when you are looking at the global tension and the fact that India continues to be the fastest growing large
19:51economy.
19:52And the fastest growing economy in general, you know, most of these economies have either stagnated or there is no
20:00growth whatsoever.
20:02And slow growth, I would say.
20:03Okay. So, do you see these GDP numbers finally settling what many have been saying, economists and otherwise, that Indian
20:13economy is in crisis?
20:17Certainly not in crisis.
20:18No, you know.
20:19At the same time, you know, I don't want to be complacent about it.
20:23I think, you know, we have to sustain that growth.
20:26And sustaining that growth requires continued reforms, continued changes to the systems so that you make the environment more business
20:39friendly.
20:40You know, there are a lot of nuts and bolts issues.
20:43There are a lot of pain points that businesses suffer.
20:47And that is reflected in the fact that, you know, most of the foreign investment in India is coming through
20:52private equity rather than through direct investment into factories and firms.
20:57So, there are these issues which ought to be addressed as we go forward.
21:02But I am also cautiously optimistic that Indian economy has been quite robust.
21:08And there are good reasons to believe that this growth has been all around, meaning, you know, services, manufacturing, both
21:17have done well.
21:18And therefore, we can be cautiously optimistic.
21:22All right, Arvind Panagri, I really appreciate your time, sir.
21:25Always a pleasure listening to you and getting perspective on important issues.
21:30So, thank you so much for joining us.
21:32Thank you, Maria.
21:34And earlier, I spoke to Congress MP Manish Tiwari about the latest GDP numbers and asked him why his party
21:41has called them greatly distorted picture.
21:44I am leaving you with this exclusive conversation.
21:46Thanks so much for watching, and I will be seeing you tomorrow.
21:54And let me bring in Manish Tiwari now, Congress MP and former minister.
21:59Mr. Tiwari, I appreciate your time.
22:01India just posted 7.8 percent growth, beating every analyst's estimate.
22:07Congress has spent years demanding the government do better on the economy.
22:10Now that it has, why is the Congress answer to attack the number instead of welcoming it?
22:21Maria, there is a need to understand the Indian economy in a certain perspective.
22:28So, 7.8 percent growth is wealth growth.
22:32But it is 7.8 percent for whom?
22:37Whom is the economy working for?
22:40Is it working for the ordinary people of India?
22:44Or is it only working for a very select few, what is called the creamy layer at the top?
22:54And let me contextualize the three problems that the Indian economy has from the perspective of 1.44 billion people
23:04who call India their home.
23:07The first is that the wholesale price index and the consumer price index are at a record high.
23:16What this translates into is high cost of daily essentials like onions, like tomatoes, like other vegetables and cereals of
23:31daily use,
23:32in addition to articles, in addition to articles, which are essential in order to continue with the everyday activity of
23:41life.
23:42Number two, India has a serious job crisis.
23:46And that job crisis manifested itself on the 20th of July, 2026, in the protests, which we saw at Jantar
23:57Mantra.
23:57It was not only about a paper leak, but the underlying frustration, the underlying causes were because of serious economic
24:10stagnation,
24:11whereby people are either unemployed, be unemployable, or see underemployed.
24:19And I can substantiate this with numbers.
24:23The third is the crisis of income inequality in the country.
24:28And in fact, that is the most serious problem, because the richest 10% in India hold 65% of
24:37its wealth.
24:37The top 1% hold 40% of that 65%.
24:42And the bottom 50% hold only 15% of India's wealth.
24:49So, therefore, GDP numbers, which governments exult over, are not a real mirror of the real economy,
25:00which impacts the day-to-day living of people.
25:04The world is dealing with a U.S.-Iran conflict, crude oil shocks, global trade tensions,
25:09and most major economies are slowing down or stagnating.
25:13And in that environment, if India has delivered 7.8% growth, the fastest among major economies,
25:20isn't that a genuine achievement?
25:24Well, Maria, this is not the first time that we've dealt with global challenges.
25:30From 2004 to 2014, India's economy clocked 8% year on year.
25:37And that was at the 2005-2006 base rate.
25:42In fact, government has been shifting goalposts, changing, you know, base years in order to try and present a more
25:51rosy picture of the economy.
25:52And at that point in time, you have the unprecedented global economic meltdown,
25:58which was considered to be the worst crisis that the world economy had faced after the 1929 Great Depression.
26:07And then, of course, you had the Eurozone crisis.
26:09So, therefore, to hang your quote on the peg of global crises and say that,
26:17oh, in spite of that, we've clocked 7.8%.
26:20And that also, with a changed base year, whereby the weightage which is given to different products or different set
26:31of products
26:32has also changed considerably, is not, in my estimation, a proper way of looking at the economy.
26:41So, while 7.8% may work, you know, for the creamy layer, for those who are at the top
26:50of the pyramid,
26:51people who are at the bottom of the pyramid, who are struggling to find employment,
26:57who are barely able to make two ends meet because of high inflation,
27:02as the late Sushma Sahar Raj used to keep saying,
27:07That is exactly what the situation is today.
27:11And so, therefore, I don't think that the state of the economy has any reason to exult.
27:19I think the triple challenge of lower employability, high cost of living,
27:28coupled with the fact that you have an economy which is being fired by public capital expenditure,
27:36are challenges, are deep structural challenges that you need to address,
27:41and they can't be papered over by the gloss of a certain number.
27:47My last question to you.
27:48Which tend to look rosy, if I can put it in those words.
27:53Mr. Tiwari, my last question to you.
27:55But the base year revision was recommended by an independent technical committee,
27:59not dictated by the government.
28:01So, if you're alleging that the base year itself was changed to manufacture a good number,
28:05then what will be the real assessment of the Indian economy?
28:08I mean, how do you assess the Indian economy there?
28:11So, therefore, this has been an ongoing debate, Maria, for a very, very long time.
28:17You see, it is correct that the base year on which the Indian economy is measured
28:22keeps getting revised periodically.
28:24But what is important is that are you attaching enough weightage to those products and commodities,
28:33which actually impacts the daily lives of the common person?
28:37Or are they getting skewed in terms of those sectors, for example, mining,
28:45for example, certain other very heavy industry but niche sectors,
28:52which may be registering, you know, a more than normal or a more than average growth
28:58or a high growth rate even.
29:00But that does not translate into the benefits of that economic growth
29:06actually flowing to the people of India.
29:10So, that is really the challenge.
29:12The question is, do these numbers or do these GDP figures,
29:19and I'm not talking of the current quarter, but GDP figures as a whole,
29:24do they reflect the true state of an economy?
29:28And in my humble estimation, they do not.
29:32Manish Tiwari, Congress Member of Parliament, really appreciate your time.
29:35Thank you for joining us.