Pushpak Gondane
Over the past few months, the country has witnessed a strange scene twice. The first came when, amid tensions in West Asia and a surge in oil prices, Prime Minister Narendra Modi urged people to use less petrol and diesel, carpool, and work from wherever possible. The second came when GDP figures for the first quarter of the financial year showed 7.8% growth—higher than expected—and in the same week, the Prime Minister advised people not to buy non-essential gold, postpone foreign holidays, and hold weddings in India instead of abroad.
For an ordinary citizen, the contradiction is obvious. When earnings are doing well, advice to rein in spending can seem odd. But the real story lies within the numbers, and it is far more interesting than the apparent contradiction—because the 7.8% figure itself has become the subject of a major debate in Delhi.
Two Economies, One Country
The first thing to understand is that the pace of GDP growth and the foreign exchange left in the country’s coffers are two different things. GDP tells us how rapidly production, services and business activity are growing within the country. But India depends on imports for oil, gold and several essential commodities. When the world is turbulent—war, oil prices, disruptions in supply chains—the import bill begins to weigh heavily, even if the domestic economy continues to grow strongly.
Gold is the easiest example. A large part of India’s appetite for gold is met through imports, and every major purchase means foreign exchange flowing out of the country. Modi’s appeal is straightforward: prevent that money from flowing out and keep it circulating within the domestic economy. The advice to postpone foreign travel and weddings abroad follows the same logic. A rupee spent overseas strengthens another country’s economy; the same money spent in India reaches hotels, taxi operators, confectioners, bands, artisans and many others.
So, up to this point, the story is clear: this is not a contradiction but two sides of the same coin. The domestic economy is running fast, but the balance sheet linked to the outside world remains fragile, and the government wants citizens to help manage that vulnerability through their everyday spending decisions.
But the Real Question Is: Where Did the 7.8% Come From?
This is where the story takes a turn that usually does not make the headlines, but one that readers of a serious magazine should know about. The day the GDP figure was released, a sharp debate also began among economists in Delhi—and this debate did not originate with an Opposition leader’s allegation. It was triggered by questions from insiders such as former Finance Secretary Subhash Chandra Garg.
What happened was that the government changed the base year used to calculate GDP—the year against which annual growth is measured. This is not unusual in itself. Governments around the world periodically do this because an old base year eventually becomes outdated. But Garg has argued that the figures for the earlier quarter underwent such a significant revision under the new base year that, had the old methodology been used, the growth rate would have been around 2.5–2.6 per cent instead of 7.8 per cent. In other words, the same economy and the same quarter can produce a difference of more than three times in the result depending on the methodology used for calculation.
The government’s response was equally swift. The Ministry of Statistics made it clear that there had been no ‘mechanical’ or manipulative alteration of the figures; changing the base year is a predetermined and regular process. Union Minister Piyush Goyal went a step further, directly attacking the critics and saying that these figures are not produced by any politician or minister, and that questioning the data amounts to questioning the country’s hard work.
The Real Debate Behind the Numbers
It would be easy—but wrong—to dismiss this entire confrontation as simply ‘the government versus the Opposition’. The real question is technical as well as democratic: when a government itself determines the yardstick by which its performance is measured, how can confidence in that yardstick be maintained? Around the world, the credibility of statistical institutions rests on their ability to remain as far removed from political pressure as possible. The same expectation exists in India.
What is also interesting is that the debate did not remain confined to experts on statistics. Some commentators have argued that casting doubt on the economy without concrete evidence has itself become a form of ‘intellectual exercise’—that is, viewing every piece of good news with suspicion has become fashionable. That observation deserves as much consideration as Garg’s objection.
For the ordinary reader, one thing emerges clearly from this debate: no major economic figure is merely a number. How it was calculated, which year it was compared with, and which components were added or removed—all of this determines how much truth a number tells, and how much it conceals.
So, What Does It Mean for the Common Man?
Whether 7.8 per cent is correct or the figure is closer to 2.6 per cent, one thing does not change: a large part of India still lives under the shadow of expensive oil, costly imports and an unstable global environment.
Therefore, it would be premature to dismiss Modi’s appeal as merely a political slogan—but accepting it without asking questions would be equally premature.
Critics argue that an appeal to citizens to practice restraint is only a temporary remedy; the real solution is to reduce the country’s dependence on imports, expand sources of affordable energy, and create jobs.
Supporters argue that in times of crisis, even a small act of restraint by every citizen can add up to make a significant difference.
Perhaps the truth lies somewhere between these two perspectives. Having a fast-growing economy is good news, but how transparent the yardstick used to measure that growth is remains just as important as the growth itself. And until that question is fully resolved, perhaps the sensible thing is for us to keep as close an eye on our wallets as the government claims to keep on its numbers.
