Abhishek Anand, Josh Felman and Arvind Subramanian ask how India could have grown at 7.8% in a quarter marked by an energy shock. It is a fair question. It also has an answer, that has been in plain sight for some years.
Begin with the timing. The quarter runs from April to June 2026. The conflict between Iran and the US and Israel peaked just before it. Oil prices jumped, and India felt it. The sharpest disruption, though, fell in March and the first days of April. By May, the pressure had eased. By June, it had largely passed. A few difficult weeks at the start of a three-month quarter do not turn the quarter’s number into fiction.
The evidence from those months points one way. Auto sales rose steadily. Bank credit expanded, and exports grew, aided by a competitive currency. GST collections stayed buoyant even after the rate cuts, rising 8.3% in the year just ended. Over the three years to 2025-26, gross GST collections rose by 32%, while nominal GDP rose by 31.9%. Those two figures come from entirely different places, and they track each other almost exactly. GST returns are filed by companies. Credit data comes from banks. Trade data comes from ports. The statistics ministry writes none of them.
Why did the economy hold? Because several reforms matured simultaneously. The Union government’s capital spending has increased by 65% since 2022-23 and is budgeted to grow by another 11.5% this year. Roads, ports and power capacity built over a decade do not stop working when oil turns expensive. Digital public infrastructure has drawn much of informal activity into the formal, measured economy. The insolvency code changed how banks and firms deal with bad debt. The real estate law cleaned up a sector once known for stalled projects and opaque money. The Economist described that clean-up back in 2023. It was not doing New Delhi a favour.
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Then there is what the government did in response to the oil shock. It did not pass the price rise on to households and firms. It carried the cost itself. It is what fiscal space is for, and India has built it. The proof arrived on September 2. The Japan Credit Rating Agency raised India’s rating from BBB+ to A- with a stable outlook and lifted the country ceiling to A. India has not held an ‘A’ rating in more than three decades. The agency cited digital public infrastructure, the GST, the insolvency code and a gross non-performing loan ratio down to 1.8%. It also noted that the Centre cut its fiscal deficit from 4.7% of GDP in FY25 to 4.4% in FY26, while maintaining high capital spending. A rating committee in Tokyo has no reason to please anyone in New Delhi. It read the same reforms and reached the same conclusion.
Now to the core of the criticism. If these indicators justify 7.8% today, the authors ask, why did similar growth in earlier years come alongside weaker indicators? The premise is that growth must always be driven by the same things. It need not be. A quarter carried by exports and formal credit will not resemble a year carried by household spending or public investment. The earlier years had their own drivers, visible at the time. Up to 2024-25, the stock market rose strongly, and many more Indians began investing. Household net financial savings rose more than 60% between 2022-23 and 2024-25. Non-bank and technology-enabled lenders expanded quickly. Total resource flows to the commercial sector grew by 72% over three years, with the non-bank share up by 96%. Those were real drivers. They were simply different ones.
Credit outstanding to micro, small and medium enterprises grew 66.6% between March 2023 and March 2026. It was still growing at close to 25% in July 2026. Small firms are said to be the ones the energy shock hurt most. Their lenders do not appear to share that view. Lenders rarely extend credit to firms they expect to fail.
Running beneath the argument is a suggestion that the statistics ministry exists to make the government look good. The record does not support it. For 2023-24, the ministry revised the growth estimate from 9.2% (under the old series) to 7.3%. That is nearly two percentage points, surrendered voluntarily. The arithmetic goes the wrong way for the accusation elsewhere, too.
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In 2024-25, nominal GDP growth under the new series came in lower than under the old, 9.4% against 9.8%, even as real growth rose. Nominal GDP is the base for the government’s fiscal targets. It is the number the government most wants to be high. A ministry cooking books does not cook them at its own cost. Across 2024-25 and 2025-26 together, average real growth rises from 7% to 7.5% under the new series. That is half a percentage point. Take three years, 2023-24 to 2025-26, and average growth in the new series is lower than in the old, 7.4% against 7.7%.
The authors end with a proverb. What is sauce for the goose today, they write, is sauce for the gander over the past. The principle is sound. We ask only that it be applied in full. The record for the earlier years is there too: household savings, credit growth, resource flows, tax receipts and a widening investor base. Pick a few indicators, and the past looks thin. Weigh all of them, and it does not.
India absorbed a large shock and kept growing, on the capacity built over a decade and the fiscal room it had earned. That is a result, not an artefact.
Saurabh Garg is secretary, ministry of statistics and programme implementation, and V Anantha Nageswaran is chief economic adviser, Government of India. The views expressed are personal
