Sanctity of Economic Data

A battle royal is developing over the integrity of official data related to the country’s economy. After 108 top economists from India and abroad recently wrote an open letter to the Indian government expressing concern over ‘political interference’ in influencing such data, 131 chartered accountants have hit back by questioning their ‘motivation’. On two major fronts — growth and unemployment — the economists had posed hard questions. As per the new method of calculating GDP growth adopted since 2015, the Central Statistics Office (CSO) revised growth estimates for 2016-17 fiscal to 8.2 per cent from 7.1 per cent earlier; the economists contend this figure neither agrees with related macro aggregates, nor their estimates showing lower growth due to demonetization. The clincher was the junking of National Statistical Commission (NSC) estimates (showing lower growth) in favour of CSO estimate presented to the public by NITI-Aayog. The involvement of NITI-Aayog in the process “did great damage to the institutional integrity of autonomous statistical bodies,” the economists wrote. Further, they asked why the data on unemployment by National Sample Survey Organisation (NSSO) was scrapped, with the government instead using Labour Bureau survey data on jobs created under the ‘Micro Units Development and Refinance Agency (MUDRA)’ scheme. This has to be seen in the backdrop of controversy over a leaked NSSO draft report revealing that unemployment in India in 2017-18 had hit a 40-year high of 6.1 per cent.

In a hard-hitting rejoinder, the chartered accountants have pointed out that periodically changing the base year of national accounts statistics is necessary ‘to reflect transitions as well as disruptions in the economy’. Thus base years have been changed five times before 2006, and it was the UPA government which set in motion the next change of base year from 2004-05 to 2011-12, as well as approved its methodology. Further, the new GDP series (whose numbers came out during NDA rule) is compliant with the 2008 UN guidelines on calculating national accounts, the CAs argue. Asking why the economists remained silent when India was lagging in growth rate earlier and public banks were hiding their NPA burden, the CAs say that the country is poised to move on a higher growth trajectory with infrastructure growth speeding up, much greater ease of doing business, fast increase in market capitalisation, unleashing of GST reforms, formalisation of the economy through demonetisation, introduction of bankruptcy code, tough action on bank NPA problem, more jobs in service sector, and plugging of leakages in money transfer through Jan Dhan accounts and Aadhar. So who is right in this debate, or can we say the economists and the CAs are like the proverbial blind men arguing over their versions of the elephant? What we are seeing is a dangerous lack of faith in data that had been hitherto unquestioned. After all, rigorous methodologies are put in place before the surveys are carried out; many precautions are taken, filters used and tests applied to ensure the purity of data. Yet the government is now accused of suppressing ‘uncomfortable’ data and seeking to doctor it, while the motives of detractors are doubted! This is bad news for not just policymakers and investors, but also scholars studying the Indian economy. Since governments know that official data will always be questioned by experts (and more stridently by the opposition), the only way to ensure transparency and reliability is to strictly align all such processes with accepted international norms and practices.