Cambridge/New Delhi (26 May 2025) — A groundbreaking study by the Harvard Center for International Development has revealed that India’s real GDP growth has been significantly overstated since 2011 due to changes in data sources and methodology. The report, titled "India’s GDP Mis-estimation: Likelihood, Magnitudes, Mechanisms, and Implications", suggests that the average growth officially reported at around 7% annually between 2011-12 and 2016-17 was likely closer to 4.5%, with a 95% confidence interval ranging between 3.5% and 5.5%.

The overestimation, according to the study, stems from a key methodological change that particularly affected the way formal manufacturing sector output was measured. This change created a distorted picture of India’s economic health, making growth appear more robust than it actually was.

A 36% Overstatement Over 14 Years

The impact of this overstatement is not minor — from 2011 to 2025, India’s GDP is believed to have been exaggerated by up to 36%. This has had far-reaching consequences, not only misleading public expectations but also shaping government policies, economic decisions, and employment narratives based on flawed data.

Over the last 14 years, this inflated growth projection has contributed to an economic illusion — giving the impression of rapid progress while many fundamental issues remained unaddressed. In reality, a significant part of the economic progress was either overstated or based on incorrect assumptions.

The Truth Behind the Numbers

The core issue highlighted by the Harvard report is not just about how much the GDP grew, but how accurately that growth was reported. Experts have long raised concerns about the reliability of GDP data from countries like India and Bangladesh, even dating back to the mid-1990s.

False Growth, Real Consequences

This misreporting has affected key areas such as government pay scales. For instance, several Pay Commissions have used inflated GDP figures to justify large salary hikes for government employees. Over three decades, the average government salary has increased disproportionately — now more than six times higher than the average income in the unorganized sector, compared to just double in the past. This has also contributed to ballooning public debt and fiscal pressure.

Per Capita Income Distortion

The illusion of rising average income is also challenged by analyzing per capita income distribution:

Official per capita income: $2800

Excluding wealth of top business tycoons: $2700

Excluding top 10 richest: $2500

Excluding top 200 richest: $2150

Excluding top 1%: $1730

Excluding top 5%: $1130

These numbers show how a small ultra-wealthy class skews national statistics, masking the real economic conditions experienced by most Indians. The growing disparity between economic data and on-ground realities — rising inflation, unemployment, and cost of living — reveals the severe limitations of GDP as a sole measure of economic well-being.

Time to Embrace a New Economic Reality

The Harvard report is a wake-up call. It challenges the long-standing narrative of India’s post-2011 economic boom and calls for an urgent reassessment of how economic success is measured. The report emphasizes the need to move beyond inflated metrics and focus on authentic, inclusive growth that reflects the lived reality of India's population.

This is not just a data correction — it’s a call to shift the foundation of economic policymaking from numbers that shine to truths that matter.