Relevance: GS-3 (Indian Economy); Source: The Hindu

India’s recent high GDP growth (Q2FY26: 8.2%) has revived debate on whether headline numbers truly reflect quality, inclusiveness and sustainability of growth. IMF’s “C-grade” comment on India’s Data Adequacy highlights deeper structural issues.

Why GDP Alone Is Not Enough

• Data Quality Concerns: IMF notes frictions in India’s National Accounts, especially the underestimation of the informal sector (≈90% of workforce).
  
• Employment Paradox: Despite growth, formal-sector jobs remain inadequate. Only 46% of the workforce is formally engaged; sectoral job growth was just 3.5% in Q2FY26.
  
• Environmental Unsustainability: India hosts 45 of the world’s 50 most polluted cities (IQAir). Delhi’s AQI > 400 implies that high GDP is coexisting with worsening air quality, water scarcity, and groundwater contamination.
  

Key Structural Issues Highlighted

1. Skewed Growth Pattern

• Expansion is in informal, low-productivity sectors, not in high-skill manufacturing.
  
• Lack of urban job creation pushes people back into agriculture → disguised unemployment persists.
  

2. Need for Better Data Infrastructure

• IMF stresses upgrading the GDP base year and improving high-frequency indicators, especially for informal economic activity.
  
• Better data also enhances policy credibility and investor confidence.
  

3. Green Growth Deficit

• India’s polluted cities and degraded water systems contradict sustainability goals.
  
• Clean energy, circular economy, and municipal reforms must become central to growth planning.
  

The Way Forward 

• Shift from quantity to quality of growth: focus on productive formal-sector jobs, skilling, ease of doing business, and labor market reforms.
  
• Environmental mainstreaming: adopt coordinated action on crop residue management, public transport, industrial emissions.
  
• Fiscal priorities: Increase spending on public health, climate adaptation, and statistical capacity.
  
• Institutional strengthening: independent environmental monitoring, transparent economic datasets.