Till a few years ago, an internationally acclaimed information technology company was known for its tactful management of its periodic profit guidance. In the normal course of announcing its quarterly results, the company would present a profit growth number for the coming quarters. A retrospective analysis showed that its guidance number for profit growth in the upcoming quarters invariably turned out to be slightly lower than the actual performance that was eventually announced.
Many experts interpreted this as a classic case of managing expectations and springing a positive surprise. The stock market and analysts would marvel at the company’s ability to exceed its guidance. Over time, this was also described as that company’s deliberate guidance management policy.
Should the government’s think tank and the Prime Minister’s advisory body also follow this principle of providing guidance on the Indian economy’s growth and inflation trajectory? Of course, there should be no need to follow the kind of guidance management policy that the company in question might have adopted. But more analyses and forecasts on how the Indian economy is going to fare can surely be of immense help. Not only markets, but even the government’s policymakers would benefit from such early assessments.
At present, such guidance comes principally from the Reserve Bank of India (RBI) and the annual Economic Survey from the Union finance ministry. The RBI’s assessment is more frequent, coming every two months along with the monetary policy reviews. The annual Economic Survey’s outlook for the economy is comprehensive but it can quickly become outdated, as recent developments show. For instance, the Economic Survey for 2025-26 was presented on January 29, almost a month before the war began in West Asia. It had, therefore, forecast an economic growth rate of 6.8 to 7.2 per cent for the Indian economy in 2026-27, which is not what anyone is expecting now.
In recent years, the Monthly Economic Review (MER), produced by the finance ministry, has made a big positive difference to understanding the state of the economy. With a revamped structure and updated content, the MER provides a comprehensive analysis of how the economy is performing and what the headwinds or tailwinds might be. Yet, it prefers not to project a specific growth or inflation number for the year. Perhaps, it can use its own sources of information and parameters, including those of high-frequency indicators, to estimate a growth number that can serve as a more precise barometer for the Indian economy.
The ongoing conflict in West Asia has cast a long shadow over the Indian economy’s growth prospects and its ability to keep inflation in check and the external sector under control. In 2025-26, India’s gross domestic product (GDP) grew at a healthy pace of 7.6 per cent. Forecasts for growth in 2026-27 from government outfits, international institutions and rating agencies indicate a lower growth rate than what was achieved in 2025-26. Retail inflation projections for the coming months also are on the higher side, compared to 2.1 per cent for 2025-26. And India’s balance of payments pressure is set to increase.
The April edition of MER pulls no punches when it says: “India enters FY2026-27 at the intersection of domestic resilience and external turbulence. The outgoing fiscal year delivered real GDP growth of 7.6 per cent, the strongest in recent years, encouraging a 7-7.4 per cent forecast for the upcoming financial year, only to be clouded by an altered macro-outlook in the wake of the West Asia war. A ‘supply shock’ is apparent in the economy. An accompanying demand compression is a serious concern, given high prices, rising inflation, and a reduced pace of economic activity. Inflation may become cost-push as business/producers pass on their increased input costs to protect their profit margins.”
What is missing in India at present is a similar assessment from two of its major institutions — the Economic Advisory Council to the Prime Minister (EAC-PM) and the National Institution for Transforming India (NITI Aayog). While the RBI and the finance ministry present a broad outline of the state of the Indian economy to the nation, the two bodies (EAC-PM and NITI Aayog) currently do not issue similar reports with monthly, quarterly or annual frequency. To be sure, these two institutions produce a large number of reports. But these reports focus on sectors and schemes run by the government.
There is no reason for the EAC-PM or the NITI Aayog not to issue a quarterly or a half-yearly report on the state of the Indian economy and the measures they believe the government should consider. In the past, EAC-PM did produce such reviews of the Indian economy, igniting a healthy debate over how the economy should be managed. In its earlier avatar as the Planning Commission, NITI Aayog was also engaged in producing such reviews to supplement the work done by the RBI or the finance ministry.
It is not that the EAC-PM or NITI Aayog lacks the resources to produce such reports for the government. The EAC-PM has many part-time members, who are also economists with credibility and competence. Similarly, the NITI Aayog has just been reconstituted with Ashok Lahiri, a former chief economic advisor, as its new vice-chairman.
It is time the country had access to a larger and a more varied range of assessments of the Indian economy. The RBI and the finance ministry should continue to bring out its periodic reports on the state of the economy. Given the volatility in the global economic order, caused by the West Asian conflict, the demise of the multilateral trading system and the United States’ tariff tantrums, the EAC-PM and a new-look NITI Aayog can supplement the efforts of the RBI and the finance ministry in improving our understanding of the Indian economy and offering policy prescriptions.
AK Bhattacharya is the Editorial Director, Business Standard. He tweets @AshokAkaybee. Views are personal.