India has likely been faking its economic growth numbers for 20 years, hiding a massive slowdown behind bad data.
SSRN · March 18, 2026 · 6428180
The Takeaway
The study suggests that India's 'stable' growth is a statistical illusion caused by using formal sector data to estimate the vast informal economy. When adjusted for shocks that hit small businesses—like the 2016 demonetization—recent growth appears overestimated by up to 2 percentage points, meaning the economy is much more fragile than official numbers suggest.
From the abstract
This working paper presents new evidence suggesting that India misestimated its annual growth rate during the past two decades. Growth during the boom years between 2005 and 2011 may have been underestimated by about 1-1½ percentage points on average; and subsequent growth between 2012 and 2023 may have been overestimated by about 1½-2 percentage points. Once these adjustments are made, it appears that the Indian economy did not grow at a stable rate over the past two decades but rather boomed d