What is the truth behind the 7.8% GDP growth rate?

A surge in quarterly growth should not be a cause for concern.

GDP, or Gross Domestic Product in English, refers to the total income of the country, which is the total income of the 1.45 billion people in the country. It is measured every three months. The current growth rate of 7.8 percent is for the first three months of 2026-27, that is, for April, May, and June. This means that compared to the GDP during the same three months last year, in 2025, it has increased by 7.8 percent this year.

There is no doubt that this growth is quite good and significant. Last year, the GDP grew at a rate of 6.9 percent during these three months. Therefore, this growth rate is larger in comparison. An increase in GDP is undoubtedly an important indicator of economic development. Thus, it can be said that the country's development is progressing rapidly.

But the question is, how much will the GDP grow over the entire year compared to last year? There are still nine months left in this year, 2026-27. Will the growth rate remain at 7.8 percent during that time? That is a big question. If it decreases, the average for the entire year will drop. Therefore, one should not be overly influenced by a significant growth rate over just three months.

Now see-

(1) The Reserve Bank has estimated the growth rate for the entire year of 2026-27 to be only 6.7 percent. Perhaps the Reserve Bank may revise its estimate, that is also possible. But so far, it has not said anything about it.

(2) The State Bank of India claims that growth will occur at a rate of 7.3 percent.

(3) The World Bank has estimated this year's GDP growth at 6.6 percent, the International Monetary Fund (IMF) at 6.4 percent, and the Asian Development Bank (ADB) at 6.6 percent.

Now, will all these estimates prove to be wrong? Nothing can be said for sure.

And look, after the figure of 7.8 percent growth rate has come out, some economists are saying that the average growth rate for the entire year will be between 6.9 percent and 7.2 percent. This means that during the next nine months, the growth rate will certainly not be 7.8 percent, as all economists are saying. It is clear that the growth rate of 7.8 is an exceptional event.

Now the important point:-

(1) This growth rate of 7.8 percent is at constant prices. That is, it is not based on the current prevailing prices. Rather, it is measured at the prices of 2022-23. If it were measured at current prices, it would be 10.3 percent. This means that only 2.5 percent inflation has been deducted. Is inflation really that low? No. The actual inflation rate has been 3.93 percent. This means that the GDP growth rate is not 7.8 percent; it is actually 6.37 percent. When GDP is measured at constant prices, it is referred to as real income. This is the true measure of development. Therefore, the government data provided currently seems to have some discrepancies.

(2) Let’s look at GDP in a slightly different way. For example, let’s assume there are only two people in the country. One has an income of ₹20,000 a year and the other has an income of ₹10,000. Thus, the country's GDP is ₹30,000. Now, if the person earning ₹20,000 sees their income rise to ₹25,000 and the person earning ₹10,000 does not see any increase, the country's GDP will still rise to ₹35,000. This means that GDP has increased by 16.66 percent. However, the person with the lower income has not seen any increase, while only the income of the person with the higher income has risen.

Therefore, the 7.8 percent income increase in the country does not reveal whose income has increased and by how much — whether it is the rich or the poor — this is not clear. It is just an average. If the income of the poor does not increase as much as inflation, then despite the increase in GDP, the situation of the poor will worsen, as their real income will decrease.