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Understanding the high April-June GDP growth numbers

Published on 03 Sep 2025
You need to understand the following:- -------------------------------------------- Nominal GDP figures are deflated (you can say reduced or adjusted) by the inflation figures to arrive at the real GDP growth. Now this deflator (which represents inflation) is calculated for 3 months (a quarter) for different sectors which is then used to deflate the nominal figures. GDP deflator is calculated for different sectors as a combination of WPI and CPI but WPI has more weight in it. There are two ways to deflation (adjust/reduce) the nominal GDP to get Real GDP. Single Deflation Method: First calculate value addition of any sector in nominal terms (Nominal output value - Nominal input value) and then deflate it by the deflator of that specific sector, so you will get real value addition in that sector. Double Deflation Method: First calculate Nominal Output value and deflate it by the required deflator so you will get Real output value. Then you calculate Nominal Input value and deflate it by the required deflator so that you get Real Input value. [So here you are using two different deflators for output and input and hence it is called double deflation method]. And then calculate Real Value Addition by subtracting Real Input value from Real output value. So these two different methods may give different results based on how we calculate deflator for which sector and which method we are using for which sector. But double deflation is better as it will give more accurate result of value addition in that specific sector. NSO uses different deflators (double deflation method) for output and input for agriculture and mining and quarrying but it uses the same deflator for other sectors. No need to go into calculations if you can visualize these things.
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