Quick Edit of the Day

Data and policy

The need for a robust data collection architecture cannot be overstated; it affects policy decisions which can have long-term implications. In an interview published in Mint on Tuesday, former Reserve Bank of India (RBI) governor Duvvuri Subbarao highlighted how data in 2009-10 showed that growth was weak, which resulted in the central bank raising rates at a much slower pace even though inflation was picking up. It was only known later that the actual growth was stronger than the numbers suggested.

The pace and quantum of rate hikes would have been different if RBI had better data to work with. It is possible that the inflation menace the country later faced could have been avoided. India has now moved to a new method of measuring output and a new monetary policy framework. But the government would do well to continuously invest in gathering information. The need for robust data is not limited to monetary policy.