India is growing at 7.8%. Should you believe it?

Koi khabar aayi na pasand to end badal denge – Gulzar, Vishal Bhardwaj, Sunidhi Chauhan and Clinton Cerejo, Ek Thi Daayan, 2013.

Gajar ne kiya hai ishaara, ghadi bhar ka hai khel saara – Anand Bakshi, Kalyanji-Anandji, Viju Shah, Sadhna Sargam, Alka Yagnik and Sapna Mukherjee. Tridev, 1989. 

India’s gross domestic product (GDP) growth for April to June 2026 stood at 7.8% – meaning that the Indian economy during the period grew 7.8% in comparison to April to June 2025.

The publication of the GDP data led to two things. 

1) Those in the godi media and many in the business of managing other people’s money (OPM) have got an opportunity to come out with their bugles playing and their kilts flowing, and telling us lesser mortals that all is well with the Indian economy, and that India has managed to handle the negative economic impact of the war in West Asia very well. 

Of course, this isn’t the first time they have done something like this. Such repeated behaviour goes back to the original siren call – Acche Din Aane Waale Hain – that slogan still plays in their minds over and over again, like Tirchi Topi Waale Babu Bhole Bhaale plays in mine. 

2) Many not in the godi media or in the OPM business for that matter, got active in explaining that the GDP data was being statistically managed to paint an economic picture that was better and brighter than it actually was. 

Now, as someone who doesn’t work for the government or covers or has ever covered any economic or finance beat based in Delhi, I really don’t know if the data is being statistically managed or not. 

Okay, I was being euphemistic here. 

Let me rephrase that – I really don’t know whether the GDP data is being fudged or not. But what I do know is that there is a huge gap between the real state of the Indian economy and what the GDP growth figure published by the government suggests. 

And this needs to be kept in mind before any of us go down the social media rabbit hole of whether the GDP is fudged or not. 

So, let’s dig in. 

1) In 2025, 56.2% of the labour force was self-employed. In 2022, this was at 56.6%.  

Basically, more than half of the workforce is self-employed. Of course, the godi media will tell you that it’s a good thing to be entrepreneurial. But if more than half of the workforce is self-employed then it’s a reason to worry not celebrate. 

These individuals are what the National Council of Applied Economic Research (NCAER) calls subsistence entrepreneurs, who operate with “low capital and do not hire labour”. 

This is what was famously referred to as Pakodanomics a few years back. 

2) Any country goes from being a developing economy to becoming a developed one, by moving people out of agriculture and into manufacturing jobs. 

In 2025, 43% of the workforce was in agriculture. This is lower than 45.5% in 2022, but similar to 42.5% in 2018-19, before the pandemic broke out. The proportion of the workforce working in manufacturing was at 12.1% in 2025. It was at 12.1% in 2018-19 as well. 

Agriculture has huge disguised unemployment. Disguised unemployment essentially means that too many people are trying to make a living from agriculture. On the face of it, they seem employed, but their employment is not wholly productive: agricultural output would not suffer even if some of them stopped working.

3) A recent report by the Niti Aayog puts the number of youth not in education, employment or training (NEET) at 8.7 crore. As per the NCAER, 39% of young women and 10% of young men remain NEET. This is one of the highest globally.  

Now, in order to be counted as unemployed, one has to be unemployed and looking for employment. If one is not looking for employment then one does not get counted as unemployed. Typically, people stop looking for a job when they can’t find one. 

This basically helps the government report a low unemployment rate – which then the godi media and the OPM wallahs tom tom about. 

4) India’s household debt has exploded. In September 2025, the latest data available, it stood at 45.5% of the GDP. It was at around 32-33% in the mid 2010s. 

This increase has been primarily on account of a jump in non-housing retail loans. Non-housing retail loans consist of personal loans, vehicle loans, credit card outstandings, consumer loans, loans against gold jewellery, education loans and so on. 

This implies multiple things. 

First, many households are taking on loans for consumption purposes and not to build assets which they can use in the future. This in an environment where as NCAER points out, salaried earnings and earnings from self-employment have been largely constant.

Second, data also suggests that people may be taking on newer loans to repay earlier loans.

Third, India’s household debt is higher than other emerging market economies like Chile, Brazil and South Africa, but it’s lower than that of China, Malaysia and Thailand.

Nonetheless, as the Financial Stability Report for June 2024, published by the Reserve Bank of India (RBI) had pointed out: “The stock of household debt in India is relatively low when compared to other emerging market economies, but in relation to GDP per capita [per capita income], it is comparatively high.”

5) India’s youth are struggling – even those who have jobs or a regular income. And this has led to a situation where many are trying to generate a side-income through gambling. 

In the last few years, this dynamic has led to the rise of crypto, online money games, futures and options and illegal betting apps. 

A recent report by the Securities and Exchange Board of India pointed out that when it comes to futures and options, the “trading  activity  is  predominantly  concentrated  among  relatively  young  investors [and] lower income groups”. And most such young traders end up losing money. 

6) Homes in most Indian cities remain unaffordable for the young, the poor and the middle class. At the same time, cash in the Indian financial system as a proportion of the size of the Indian economy, continues to remain at pre-demonetisation levels. What does that tell us? That black money still drives large parts of the economic ecosystem. 

7) Two-wheeler sales crossed their 2018-19 peak only in 2025-26, and that too after the government decided to cut the goods and services tax. This isn’t really a sign of a flourishing economy. Small car sales had similarly been stagnant for many years. 

8) The cost of education and health have gone through the roof but somehow they don’t reflect in the sarkari inflation figure. 

9) In February 2026, the government introduced a new GDP series with 2022-23 as its base year. It replaced the earlier GDP series which had a base year of 2011-12.

Consider private consumption expenditure – the money you and I spend on buying things. It typically tends to form around 55-60% of India’s GDP. 

If we add up the total private consumption expenditure from 2022-23 to 2025-26, the figure under the new series is Rs 80.7 lakh crore lower – or 10.5 percent less – than under the old series. This is consumption that has now gone missing. It never existed in the first place. 

How did this happen? Why was the old GDP series overestimating the size of India’s consumption economy by such a large margin? Why are the OPM wallahs not talking about this? 

This is the real GDP story that gets lost when we focus only on the headline growth number.

10) For more than two decades now, India has been sold as a huge consumption story. 

The pitch is simple. India has a huge population. Millions of people are moving up the income ladder. They will buy cars, two-wheelers, houses, phones, televisions, air conditioners, tea, coffee, shampoo, detergents and everything else that businesses can sell them. And Indian corporates, naturally, will be there to meet this enormous demand.

There is, however, one small problem with this story.

Indian corporates don’t seem particularly keen on investing in the India that exists in all those pitch decks. Which is something that the finance minister, Nirmala Sitharaman, has to regularly remind them of. 

There is a striking difference between the optimism they display when talking about India’s economic potential and the amount of money they are actually willing to put behind that potential. The former is seemingly limitless. The latter, not so much.

That raises an obvious question: if India is truly the consumption superpower we have been told it is for over two decades, why aren’t Indian companies investing aggressively to serve all those consumers?

Perhaps the problem is that we’ve been telling ourselves a consumption story for so long that we’ve stopped checking whether enough consumers actually have the capacity to spend.

If they did, Indian consumption between 2022-23 and 2025-26 wouldn’t have been reduced by more than Rs 80 lakh crore – or as a back of an envelope calculation suggests – close to a trillion dollars. 

Indeed, the private investment that happens is capital intensive and not labour intensive. So, it doesn’t create many jobs. 

11) Nearly two thirds of the country is receiving food subsidies. Cash distribution programmes are the order of the day with politicians having figured out that it is easier to get votes by distributing cash than delivering public services better. 

12) As a country, we seem less interested in fixing the problems holding us back and more interested in congratulating ourselves and patting our backs on how exceptionally well we are doing. (Honestly, there is a perfect word in Hindi that defines this, but then sometimes my mother reads what I write.)

There is a whole ecosystem which exists just to build narratives – even people who otherwise like to project themselves as serious economists, analysts and OPM wallahs – are cashing in on this economic opportunity. 

13) All political accountability seems to have been postponed till 2047 – when suddenly everything will become all right. Sometimes, I feel that 2047 is the year that will come after 2026 – and that there will be nothing in between. 

And so exam paper leaks don’t matter. 

Corruption doesn’t matter. 

Newly built roads and bridges collapsing don’t matter.
Flooded cities don’t matter. 

The fact that even something as basic as breathing has become so difficult during certain times of the year, doesn’t matter. 

Or that we build airports where no flights land. That doesn’t matter either. 

All accountability has been postponed. 

14) In an environment where we have grown at close to 8%, we have been asked to not buy gold or travel abroad for that matter. This has left me very confused: If we are a Vishwaguru and growing at close to 8%, then why are we being asked not to buy gold or travel abroad? 

15) Why does the target date of India becoming a $5trillion economy keep getting postponed? Now, we are expected to get there in 2029. 

16) The  economic growth at 7.8% was higher than what was projected by the RBI as well as the corporate economists and the stock market economists. Nonetheless, the stock market has barely reacted to this. What does that tell us?

17) All writing is thinking at the end of the day. And between starting to write this piece and now, I am reminded of something known as the Goodhart’s Law, which states: “‘Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes.”

In simple English, this means: “When a measure becomes a target, it ceases to be a good measure.”

The GDP growth figure has become a target which is to be used extensively over WhatsApp University to tell us that all’s well with the Indian economy. 

And those who question this narrative are Urban Naxals or Dimagi Naxals for that matter. You can take your pick. And so they don’t know what they are talking about. 

Now compare this to the period between 2004 and 2008, when India grew at 8-9% (as per the 2004-05 series). That growth could be felt. There was a certain optimism in the air and on the streets. 

Even the OPM wallahs said the same thing in the public domain as they said privately. (Something that doesn’t happen now.) 

The economist Robert Solow once famously said, “You can see the computer age everywhere but in the productivity statistics.” 

India today seems to have a similar problem. We can see the 8% GDP growth everywhere – in government speeches, corporate presentations, pitch decks of OPM wallahs, WhatsApp University and social-media posts. But where is it in jobs, wages, consumption, investment and the everyday lives of ordinary Indians?

A headline number is useful. But it is not the economy.

At the end of the day, it’s simple: if it’s raining outside, I’ll open the window and look. I won’t log on to X or Instagram to check. So should you, dear reader. 

Meanwhile, I am going back to singing, Oye Oye, and waking up the neighbours.

Vivek Kaul is an economic commentator and a writer 

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