🌑Knowledge Drop – 45: IMF Gives India a ‘C’ on Its GDP and National Accounts Data | For Prelims: InDepth MCQs| For Mains, All G.S Papers: High Quality Essays
Knowledge Drop – 45
IMF Gives India a ‘C’ on Its GDP and National Accounts Data
📅 30 November 2025
Syllabus: GS3 – Indian Economy, Planning, Growth & Development
Context
The International Monetary Fund (IMF) has assigned India a ‘C’ grade for the quality of its national accounts statistics under its Data Quality Assessment Framework (DQAF), placing India among the lower-rated major economies in terms of macroeconomic data reliability.
What Does the IMF’s ‘C’ Grade Mean?
The IMF grades countries on the methodological soundness, accuracy, timeliness, consistency, accessibility, and integrity of macroeconomic data.
- Grade A: High compliance with global standards
- Grade B: Acceptable with deficiencies
- Grade C: Significant weaknesses affecting surveillance
- Grade D: Poor-quality data limiting analysis
India’s ‘C’ grade indicates that policy surveillance and economic assessment may be impaired due to structural data issues.
Key Reasons for India’s Low Rating
1. Outdated Base Year (2011–12)
- GDP, CPI, and IIP continue to use 2011–12 as the base year
- Global best practice recommends revision every 5 years
- Outdated base distorts:
- Real growth estimates
- Inflation measurement
- Sectoral weights
2. Inadequate Capture of the Informal Sector
- Large unregistered, cash-based economy
- Underestimation of:
- Employment
- Household consumption
- Welfare outcomes
- Results in misrepresentation of actual economic size and distress
3. Inflation Measurement Concerns
- CPI graded lower (‘B’ instead of ‘A’)
- Reasons:
- Excessive food weight
- Old consumption basket
- Impacts RBI’s inflation targeting and monetary policy calibration
4. Delays in Data Revisions
- Long gaps between revisions reduce responsiveness to:
- Structural changes
- Technology adoption
- Formalisation trends
- Weakens real-time policymaking
5. Under-utilisation of Modern Data Sources
- MCA-21 corporate filings partially integrated
- GSTN data not fully operationalised for GDP estimation
- Limits granular and real-time economic assessment
Why This Matters for India
- Policy Precision: Faulty data weakens fiscal planning and sectoral targeting
- Monetary Policy Risks: Misreading inflation affects interest rate decisions
- Investor Confidence: Global investors and rating agencies rely on credible data
- Welfare Assessment: Underplays informal sector stress and employment challenges
Pressure for Statistical Reforms
The IMF’s assessment reinforces the need for:
- Timely base year revision
- Modernised surveys
- Greater autonomy and capacity of statistical institutions
- Integration of digital economic data streams
Conclusion
The IMF’s ‘C’ grade is not a verdict on India’s growth potential, but a warning on the tools used to measure it.
As India aspires to be a $5-trillion economy and beyond, credible, current, and comprehensive data is not optional—it is foundational for sound governance, investor trust, and inclusive growth.
Target IAS-26: Daily MCQs :
📌 Prelims Practice MCQs
Topic: IMF Gives India a ‘C’ on Its GDP and National Accounts Data SET-1
MCQ 1 TYPE 1 — How Many Statements Are Correct?
Consider the following statements regarding IMF’s ‘C’ grade to India’s national accounts data:
1)India continues to use 2011–12 as the base year for GDP estimation.
2)The IMF evaluates national statistics using the Data Quality Assessment Framework (DQAF).
3)Outdated base years can distort real growth and inflation measurement.
4)IMF awarded India a ‘C’ grade primarily due to data fabrication.
How many of the above statements are correct?
A) Only two
B) Only three
C) All four
D) Only one
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation.
🟩 Correct Answer: B) Only three
🧠 Explanation:
1)✅ True – India still uses 2011–12 base year.
2)✅ True – IMF uses DQAF for assessment.
3)✅ True – Old base years distort macro indicators.
4)❌ False – The issue is methodological weakness, not fabrication.
MCQ 2 TYPE 2 — Two-Statement Type
Consider the following statements:
1)The IMF downgraded India’s CPI data quality due to outdated base year and excessive food weightage.
2)Misestimation of inflation can affect RBI’s monetary policy decisions.
Which of the above statements is/are correct?
A) Only 1 is correct
B) Only 2 is correct
C) Both are correct
D) Neither is correct
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation.
🟩 Correct Answer: C) Both are correct
🧠 Explanation:
1)✅ True – CPI received a lower grade due to structural deficiencies.
2)✅ True – Inaccurate inflation impacts policy rates and liquidity decisions.
MCQ 3 TYPE 3 — Code-Based Statement Selection
Consider the following statements regarding implications of poor national accounts data:
1)Weak data quality can reduce global investor confidence.
2)Underestimation of the informal sector can hide employment distress.
3)Delayed base-year revision aligns with global best practices.
Which of the above statements are correct?
A) 1 and 2 only
B) 2 and 3 only
C) 1 and 3 only
D) 1, 2 and 3
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation.
🟩 Correct Answer: A) 1 and 2 only
🧠 Explanation:
1)✅ True – Credibility of economic numbers affects investor perception.
2)✅ True – Informal sector mismeasurement hides vulnerabilities.
3)❌ False – Best practice requires revision every 5 years.
MCQ 4 TYPE 4 — Direct Factual Question
Which of the following databases is used for collecting corporate sector financial data in India?
A) GSTN
B) MCA-21
C) NSDL
D) SEBI-CORE
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation.
🟩 Correct Answer: B) MCA-21
🧠 Explanation:
MCA-21 is a Ministry of Corporate Affairs database used to capture corporate financial filings for GDP estimation.
MCQ 5 TYPE 5 — UPSC 2025 Linkage Reasoning Format (I, II, III)
Consider the following statements:
Statement I:
India’s outdated statistical base years weaken the precision of macroeconomic policymaking.
Statement II:
Consumption patterns, sectoral weights and relative prices have changed significantly since 2011–12.
Statement III:
India revises its GDP base year at globally recommended five-year intervals.
Which one of the following is correct?
a) Both Statements II and III are correct and both explain Statement I
b) Both Statements II and III are correct but only one explains Statement I
c) Only one of the Statements II and III is correct and that explains Statement I
d) Neither Statement II nor Statement III is correct
🌀 Didn’t get it? Click here (▸) for the Correct Answer & Explanation.
🟩 Correct Answer: c)
🧠 Explanation:
Statement II is correct and explains Statement I – structural economic changes require base revision.
Statement III is incorrect – India has delayed revision for over a decade..
