New Delhi: India’s move to report wholesale price index (WPI) inflation data on a monthly instead of a weekly basis will remove a source of market volatility, the country’s chief statistician said in an interview on Friday.
Time-bound: Chief statistician Pronab Sen says there is strong political backing for switching to a monthly release of wholesale inflation figures. Ramesh Pathania / Mint
Pronab Sen also said India was studying the introduction of a quarterly employment survey, which would fill the biggest gap in the government’s economic data.
The first monthly WPI figure, for October, will be released on 12 November, and it will be calculated on a re-based data series.
“There will be withdrawal symptoms, but on the whole I think it’s healthier for the markets,” Sen, chief statistician of India, told Reuters.
“At least one source of volatility will be taken away.”
He said agricultural data for the July-September quarter had been late in arriving due to severe flooding in parts of the country, so it was hard to know how the fiscal second quarter GDP number would look.
Agriculture was also hurt by a summer drought in large parts of the country. Sen said agriculture output could have fallen during the quarter by between 2% and 6%, which may affect the overall GDP numbers by as much as a percentage point.
In the first quarter of the current fiscal year, India’s economy grew an annual 6.1%.
Sen also said economic data, such as exports and industrial output, would show distortions in the December quarter after activity plummeted a year ago amid the global financial crisis.
“The next three months’ figures are something that I will report, but I will take no call,” said Sen.
The government is switching to the monthly release of wholesale inflation data from its current weekly format to capture the prices of manufactured goods more accurately and align with global practices.
“What had been happening for much too long now was that we were turning out these weekly estimates which we knew, the markets knew, everybody knew were not particularly reliable,” Sen said from his office.
“The markets were reacting on a weekly basis, and we were actually introducing a source of volatility,” he said.
The government is also changing the base year to 2004 from the present 1993-94 for calculating inflation.
As is the case with emerging economies globally, India’s economic data lacks frequently collected measures of activity such as employment, retail sales and factory utilisation.
Sen said a working group was expected to submit a report soon on issuing quarterly employment data that, if adopted, would probably take at least a year to implement.
The challenge, Sen said, was that gathering jobs data in an economy such as India’s was incredibly labour-intensive.
“When you have a country where 92% of the workforce is in the informal sector, the only way you can get reasonable estimates of employment is through surveys,” he said.
Employment surveys are crucial to governments for effective policy setting. The US jobs figure, for example, is that country’s most closely-watched economic indicator.
“If you want to see how the economy is evolving, it’s really the composition of the employment which gives you the information,” he said.
“There is strong political backing for it.”