India's 'C' Data Grade Spurs Push for 2026 Base-Year Overhaul

India's national accounts statistics received a 'C' rating from the International Monetary Fund (IMF) in its latest assessment, a grade the Indian government attributes to the use of an outdated base year rather than the reliability of the data itself. Finance Minister Nirmala Sitharaman told parliament that the rating did not reflect the quality of the statistics but was a result of methodological issues, particularly the 2011-12 base year used for GDP calculations. The government is set to update the base year to 2022-23 beginning in February 2026, a move Sitharaman said would improve the data's accuracy.

The IMF's 'C' rating indicates that India's GDP data has "some methodological weaknesses" that "somewhat hamper surveillance," according to the Fund's report. This is the second-lowest grade in the four-tier system (A to D), where an 'A' is for data adequate for IMF monitoring, and a 'D' indicates serious issues. The report also noted that other aspects of India's economic data—such as inflation, government finance, and external sector statistics—received a 'B' rating.

The CEA, V Anantha Nageswaran, downplayed the significance of the downgrade, stating that the rating should not be viewed as alarming. He pointed out that the 'B' rating on overall economic data suggests India's statistics remain broadly adequate for surveillance purposes. Nageswaran emphasized that the methodology-related issues flagged by the IMF have been consistent across years and do not distort the comparison of growth figures between periods according to CEA analysis.

Why the Rating Remains a C

The IMF's annual staff report for India in 2025 retained its 'C' grade for national accounts, highlighting the need for updated methodologies. The report cited the outdated base year of 2011-12 as a key issue, along with the continued use of the Wholesale Price Index to deflate GDP data. These methodological choices, the report said, introduce potential biases and reduce the clarity of economic trends.

The Ministry of Statistics and Programme Implementation (MoSPI) has acknowledged the need for improvement and has been working on updating the GDP and CPI series. The new GDP series is expected to use 2022-23 as the base year, with the first quarterly release scheduled for February 2026. This overhaul is intended to address the IMF's concerns about data granularity, timeliness, and methodological consistency.

The IMF also emphasized the importance of addressing discrepancies between the production and expenditure approaches to GDP calculation. These discrepancies, the report noted, suggest the need for better coverage of informal sector activity and improved data collection techniques. The report also called for more frequent updates and the use of internationally accepted best practices in compiling economic statistics according to the IMF report.

What This Means for India's Economic Outlook

Despite the 'C' rating, the Indian government maintains a strong growth outlook. The IMF has projected India's economic growth at 6.5% for the current fiscal year and has commended the nation's progress in managing inflation. Sitharaman noted that the IMF did not question the validity of India's growth figures, reinforcing the government's confidence in its economic performance.

The CEA echoed this sentiment, pointing to real economic indicators to support the reliability of the data. He cited rising disposable incomes, declining policy rates, and robust credit growth in key sectors as evidence of a healthy economy. Nageswaran argued that anecdotal skepticism about the recent GDP figure of 8.2% for the July-September quarter does not outweigh the data-driven trends according to CEA analysis.

Meanwhile, the Indian government has been working to address other issues in its economic data framework. The Reserve Bank of India plans to release monthly Balance of Payments data in addition to the existing quarterly reports, while MoSPI is also updating the Index of Industrial Production with a 2022-23 base year. These changes aim to align India's statistical practices with global standards and improve the accuracy of macroeconomic monitoring.

The upcoming release of the new GDP and CPI series in early 2026 is expected to be a turning point. The IMF acknowledged in its report that the planned improvements would likely lead to more favorable ratings in future assessments. As these reforms come into effect, the focus will shift from the current 'C' grade to the quality of the new data and its impact on policy formulation and economic surveillance according to the IMF report.