Revamped GDP Framework Trims Indian Economy by Rs 12 Lakh Crore, Fiscal Deficit Concerns Arise

India's GDP recalibration sees a Rs 12 lakh crore reduction, raising fiscal deficit concerns. The new base year 2022-23 series increases real GDP growth but revises nominal GDP downwards. Experts warn of higher fiscal deficits, necessitating stronger economic growth to meet future targets.

The Indian economy sees a significant trim of approximately Rs 12 lakh crore due to new GDP calculations, sparking worries about a higher fiscal deficit. The Ministry of Statistics and Programme Implementation launched a revamped GDP framework on Friday, setting the base year to 2022-23, which replaces the 2011-12 series.

The updated series revealed a real GDP growth rate increase to 7.8% for the October-December 2025-26 quarter, largely propelled by the manufacturing and services sectors. However, contrary to expectations, nominal GDP estimates dropped from Rs 357 lakh crore to Rs 345 lakh crore, potentially pushing fiscal deficit figures upwards, according to BofA Global Research.

Experts, including CareEdge's Rajani Sinha and DBS Bank's Radhika Rao, emphasize that achieving fiscal goals will require stronger-than-anticipated economic growth. Deloitte India's new methodology employs extensive datasets, enhancing economic insights. Crisil Ltd Chief Economist Dharmakirti Joshi notes the pivotal role of private consumption in current fiscal growth.

(With inputs from agencies.)