India is genuinely growing, investing and consuming more, but it can also be a fast-growing economy where many ordinary households feel financially stretched.

Updated on: Sep 6, 2026, 08:58:29 IST

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India has every reason to take pride in strong economic expansion. The latest official estimate places real GDP growth at 7.8 per cent in Q1 FY2026–27. Yet the central question of “Growth by the Numbers” is not whether India is growing, but whether that growth is translating into broad-based prosperity. GDP measures aggregate production; it does not directly measure household welfare, income distribution, job quality or purchasing power.

The debate surrounding growth at 7.8 per cent in Q1 FY2026–27 illustrates the importance of comparability. Q1 FY2025–26 GDP at current prices was earlier reported at about ₹86.05 lakh crore, while the revised comparable figure under the new 2022–23-base national accounts is approximately ₹80 lakh crore. Against the old figure, the latest Q1 current-price GDP of about ₹88.27 lakh crore implies 2.6 per cent growth. That arithmetic is correct, but it is not a statistically comparable GDP growth rate because it mixes two different statistical series. Under the revised series, comparable nominal growth is about 10.3 per cent and real growth is 7.8 per cent.

Nevertheless, the reduction of more than ₹6 lakh crore in the previous benchmark deserves a transparent reconciliation showing the effects of new data, methodology, sectoral revisions, depreciation and other changes.

There is limitation of treating GDP as a proxy for the experience of ordinary Indians. Large corporations and formal enterprises generate extensive administrative and financial data, while informal workers, small traders, family enterprises and casual labourers are harder to measure with equal precision. This does not mean informal India is excluded, but it reinforces the need to supplement GDP with wages, employment, consumption and distributional indicators.

GDP per capita is similarly an average and cannot show who receives the gains. World Inequality Lab estimates indicate that the bottom 50 per cent received roughly 15 per cent of national income in 2022–23, compared with 57.7 per cent for the top 10 per cent. Meanwhile, household consumption, youth employment and the quality of work remain crucial indicators of lived prosperity.

The strongest test is therefore affordability: compare price increases, worker earnings and the quantity of goods or services a worker can buy. Rural wages for male general agricultural labourers rose from about ₹218 per day in 2013–14 to ₹398 in 2024–25, roughly 82 per cent. Urban regular wage/salaried earnings also rose substantially, from an approximately ₹11,691 monthly benchmark in NSS 2011–12 (to ₹26,247 in PLFS 2025).

The price–income affordability test therefore asks three simple questions: how much has the price of an essential item increased, how much have workers’ earnings increased, and consequently how many units can their income purchase today compared with earlier

This converts an abstract discussion of inflation and growth into a tangible measure of changing purchasing power.

The resulting picture is obviously mixed. Some goods became more affordable relative to wages, particularly mobile data and several manufactured products; others, including gold, private healthcare and education, became less affordable. Housing also remains a major household burden.

Nevertheless, the blanket dismissal of GDP number is unfounded. It is not correct to present that 2.5–2.6% as the real GDP growth rate for Q1 FY2026–27. It is a nominal growth calculation built from two different statistical series. Under the revised 2022–23-base series, the consistent nominal growth rate is 10.3%, while the consistent real GDP growth rate is 7.8% and the available evidence justify the GDP growth of 7.8%. We should not confuse it with every dimension of economic performance and as a guarantee of broad-based prosperity. India is genuinely growing, investing and consuming more. India can simultaneously be a fast-growing economy and a country in which many ordinary households feel financially stretched. There is no contradiction. GDP measures the growth of aggregate economic production; it does not measure how that growth is distributed.

(The author is a retired IAS officer.)

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