Rebasing Reality: Will 2022–23 GDP Expose the K-Curve?

India’s impending shift in the GDP base year from 2011–12 to 2022–23 is more than a statistical update. It is a test of credibility. After years of scepticism over official growth numbers, and an IMF surveillance assessment in November 2025 grading India’s national income statistics a C (the second lowest on its scale), the rebasing will determine whether methodological repair restores confidence or merely confirms what the economy has long been signalling.

The doubt is not new, as for nearly a decade, a quiet but persistent argument has run beneath the official narrative: that India’s reported growth has flattered to deceive. Former Chief Economic Advisor Arvind Subramanian and others have questioned whether the numbers fully capture the economy most Indians inhabit—one of fragile household balance sheets, a visibly strained middle class, subdued wage growth and rising dependence on state support.

That unease has not dissipated.

Real GDP may have averaged 8% in the first half of 2025-26, yet the sense of expansion is difficult to locate outside statistical releases. Corporate earnings calls reflect this hesitation. Management commentary points repeatedly to patchy demand rather than any broad-based revival. For many households, real incomes have scarcely moved, squeezed by rising costs and uncertain employment conditions.

Policymakers operate under fiscal constraint and limited monetary space. India’s equity markets have underperformed global peers over the past eighteen months, with foreign capital participation declining. Markets have not traded as though the economy were expanding at headline speed.

The roots of this disconnect lie partly in methodology.

The 2011–12 series relied heavily on MCA-21 corporate filings, outdated NIC classifications, and extrapolations from organised to unorganised sectors. With roughly 44% of GVA originating in the informal economy, extending organised sector trends to that vast, heterogeneous base was always a fraught exercise, especially in trade, construction and agriculture, where informality is not peripheral but foundational. Add to this the volatility and inconsistency in deflators, and the line between nominal expansion and real growth became harder to draw with confidence.

The 2022–23 series attempts a course correction. It widens the data net and reduces the reliance on mechanical extrapolation. Annual GST filings are used to map regional output and firm-level activity more precisely. Actual MCA filings for NBFCs and STRBI data for banks replace earlier proxies. Surveys such as ASUSE and PLFS are integrated to better capture unincorporated enterprises and household dynamics. The adoption of a double-deflator method is intended to bring greater discipline to real GVA estimation, particularly across sectors with divergent price movements. Consumption estimates draw more directly from household expenditure surveys. Informal capital formation and activity-wise revenue shares are better captured.

In principle, these are substantive upgrades. The question is what the integration of more representative survey data implies for measured growth.

Survey Signals
Recent surveys have consistently painted a weaker picture than the national accounts. ASUSE 2023, restarted after a seven-year gap, shows real GVA of unincorporated enterprises declining, alongside capital deepening that reduced workers per establishment and compressed real wages since 2016. Incorporating these sectors into GDP calculations implies real growth roughly 200 bps lower than previously reported GVA.

The PLFS reveals disguised unemployment embedded in headline employment since 2018 and contraction in real wages across casual, regular and self-employed workers. Meanwhile, the Consumption Expenditure Survey (2022–23), which underpins the new CPI series, suggests real rural and urban consumption has grown only 3% since 2011–12 when deflated by CPI, well below the 6% growth implied by official private consumption data.

If these survey-based realities are fully integrated into the rebased GDP, the outcome may be a downward revision to both real and nominal growth. The previous series leaned disproportionately on formal sector data, which has outperformed the informal economy. Correcting that skew could narrow the gap between headline figures and ground-level experience.

Deflators matter too. The earlier methodology’s reliance on cyclical WPI movements distorted real GVA during commodity swings. The double-deflator approach—deflating output increasingly by CPI and inputs by WPI—should, in theory, produce more accurate real estimates. Yet in a phase of commodity deflation, higher effective deflators on the output side may compress real growth further. The rebasing, therefore, carries a built-in possibility of a downward bias relative to the 2011–12 series.

Collective Markets Meh
Would that surprise markets? Unlikely.

Equities have already internalised weak demand and modest earnings growth. Nifty companies posted robust profit growth through 2023-24. Since mid-2024, earnings growth has slowed to 5–6%, and the index has drifted rather than decisively advanced. Investors appear to be trading the economy they see, not the one implied by aggregate growth rates: tempered consumption, uneven order books and profitability that is concentrated rather than broad-based.

The more meaningful consequences of rebasing will likely be felt in North Block rather than on Dalal Street. A lower nominal GDP base reshapes fiscal arithmetic: debt-to-GDP ratios edge higher, deficit metrics tighten, and current account dynamics shift. If earlier growth estimates prove generous, the room for fiscal manoeuvre narrows even as demands on the exchequer remain elevated. That, in turn, sharpens the case for policy anchored in job creation, productivity and institutional reform, particularly in a global environment marked by protectionist currents, fractured supply chains and rapid technological displacement.

If the new series narrows growth rates, it will not signify economic decline but statistical alignment. If it leaves growth largely intact, it must withstand scrutiny from improved transparency and data integration.

Either way, the exercise will reveal whether India’s growth story has been misunderstood—or merely mismeasured.