World Bank ED backs India's GDP data, sees 7.5% growth potential

World Bank's ED for India Neelkanth Mishra says India's economy can grow at 7.5% even with neutral policy. He rejected claims questioning GDP data, citing strong economic activity like vehicle sales, credit growth, and tax collections.

India’s economic growth can remain at around 7.5 per cent even with neutral fiscal and monetary policy, as accelerating credit growth and strong economic activity are supporting the recovery, Neelkanth Mishra, Executive Director, World Bank for India, said in a social media post.

Mishra also rejected claims questioning the latest GDP growth figures, saying the new GDP series introduced in February 2026 had cleaned up the data and significantly improved the methodology.

“As expected, with the fiscal headwinds fading and monetary headwinds (falling credit growth till 1HFY26) becoming tailwinds (credit growth accelerating), GDP growth is surprising on the upside, and should help push up consensus trend-growth estimates to 7 per cent-plus,” Mishra said. He said that with a neutral fiscal and monetary policy, the economy should still register 7.5 per cent growth.

GDP Data Credibility Defended

Mishra strongly criticised claims that the latest GDP growth would have been much lower if the “original” base of the June 2025 quarter had been used. He said the downward revision in the base was already known in March.

According to Mishra, the new GDP series has improved the credibility of estimates of real output. He said the claims questioning the latest growth figures were “obviously wrong” and added that several logical rebuttals had already been made.

Strong Economic Activity Indicators

He also pointed to several indicators of economic activity that he said were difficult to manipulate and showed that the momentum seen in the June quarter has strengthened further. Personal vehicle dispatches, including cars and SUVs, grew 35 per cent year-on-year in August, despite exports growing by just 9 per cent. Two-wheeler growth was also above 20 per cent, although Mishra said this was helped by strong exports.

On the investment side, commercial vehicle dispatches grew by more than 40 per cent, which he cited as another sign of stronger economic activity.

Mishra also pointed to a meaningful pickup in tax collection growth, calling tax collections a particularly strong indicator of economic activity.

“Credit growth continues to surprise on the upside (albeit on a low base),” he said. Mishra noted that while weak credit growth last year was widely seen as a demand problem, he had maintained that it was a supply issue, which has “for now been addressed.”

He also said indicators of construction activity remain robust.

Mishra said the combination of stronger vehicle sales, credit growth, tax collections and construction activity should also reduce questions over weak private-sector investment, as there is now “clear evidence of investments.”

'Slack' in Economy and Inflation Outlook

However, he said there is still some slack in the economy, reflected in weak real-wage growth. It may take several quarters of above-trend growth for this slack to tighten and bring back sticky inflation pressures, he added.

Official GDP Figures

According to data released by the Ministry of Statistics and Programme Implementation (MoSPI), India’s real GDP grew 7.8 per cent year-on-year in Q1 FY27. Real GDP at constant prices was estimated at Rs 81.36 lakh crore, compared with Rs 75.46 lakh crore in the same quarter of FY26. Nominal GDP grew 10.3 per cent year-on-year. (ANI)

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