Neutral impactEconomy
GDP methodology: MoSPI says negative manufacturing deflator does not mean factory-gate prices fell
BusinessLine 47 min ago·3 Sept 2026, 4:43 am
The Ministry of Statistics and Programme Implementation (MoSPI) has clarified a technical point regarding India's Gross Value Added (GVA) growth. The ministry explained that a negative manufacturing deflator does not imply that factory-gate prices fell. Instead, this metric can turn negative due to a statistical phenomenon known as double deflation, where input prices rise faster than output prices.
This distinction is crucial for investors as it affects how the economy's health is measured. A negative deflator does not signal a manufacturing slowdown or falling prices, but rather a specific accounting adjustment. Investors should focus on the actual volume of production rather than getting misled by this technical metric.
Moving forward, market participants should watch for the official GDP release to see how the economy is performing. It is important to rely on the official data rather than interpreting the deflator in isolation. Investors should look for broader trends in industrial output and consumption to gauge the true health of the sector.
Excerpt from BusinessLine
The Ministry of Statistics and Programme Implementation (MoSPI) has sought to address concerns over the newly released GDP estimates, saying a negative implicit deflator for manufacturing does not mean that manufacturing prices declined and that revisions to last year’s GDP were not aimed at mechanically boosting the…Read the original at BusinessLine
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- Category: Economy.
- Assessed as a significant, market-relevant update.
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