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A file photo of Hyundai plant in Chennai. Photo: Mint (Mint)
A file photo of Hyundai plant in Chennai. Photo: Mint

IIP data correction latest in list of errors and revisions

Statistics ministry revises IIP figure for April from 2% to 2.3% as provisional data on electricity had been included

New Delhi: India corrected its latest report on industrial production twice just a day after publishing the data, stoking concern over the quality of pivotal economic figures.

On Thursday, the statistics ministry revised the factory growth figure for April from 2% to 2.3% as provisional, and not final, data on electricity sector growth had been included in the index of industrial production (IIP) numbers released Wednesday. Official data that are often incomplete or months out of date contribute to a statistical fog that adds to the challenge of assessing Asia’s third largest economy.

The parliamentary standing committee on finance recently noted that the Planning Commission and the finance ministry had raised the issue of credibility, timeliness and adequacy of official statistics released by the statistics ministry and suggested a data verification mechanism.

Reserve Bank of India governor D. Subbarao has said the nation’s policymakers have to contend with both an uncertain future and an uncertain past because of more frequent revisions than elsewhere.

Researchers and data users have also criticized official statistics, especially after large revisions such as the one in the 2012 January industrial production growth figure from 6.8% to 1.1% in April last year.

“Industrial-production data quality was always suspect and something needs to be done," said Prasanna Ananthasubramanian, an economist at ICICI Securities Primary Dealership Ltd in Mumbai. “Data quality in general needs to improve."

The government must focus on getting factory output growth reports right as they are a key input for working out initial gross domestic product figures, he said.

Quarterly growth figures for fiscal years 2009 and 2010 were also revised significantly in July last year after incorporating fresh industrial growth data.

“There is cause of concern because of significant revisions of data and a case for review of data collection protocols. A case in point is also the revision in balance of payments data two years ago where the gap between the provisional and final data was far too high," said Pulapre Balakrishnan, director of the Thiruvananthapuram-based Centre for Development Studies.

Export data was revised downward by $9 billion in 2011 due to errors in capturing data, Times of India reported in December 2011.

A committee under plan panel member Saumitra Chaudhuri is looking into revising the data collection mechanism, so that primary information mined from 16 sources for IIP can be viewed and assessed by the statistics ministry as well, said Ashish Kumar, additional director general of the Central Statistics Office.

Even as the government is reworking its IIP data collection mechanism, officials had earlier told Mint that the National Statistical Commission (NSC) needs to oversee the statistical system for quality.

NSC, created by executive order in 2005, is headed by former chief statistician of India, Pronab Sen. While Sen was appointed in February, the four part-time members are yet to be appointed.

However, experts said it was the ministry’s responsibility to codify and enforce data collection and dissemination standards so that the information provided was reliable.

Chief statistician of India T.C.A. Anant said giving legal backing to the NSC will clarify coordination issues and make its recommendations carry more weight in courts, apart from making it a permanent body. He said comments from various stakeholders were being received on a draft Bill on the body.

Kumar said, “If the Union Public Service Commission’s recommendations are not followed by the government, it has to explain reasons for it in Parliament. However, recommendations of the National Statistical Commission are just advisory in nature."

Some experts say another statutory body may not be the solution.

“The ministry and the National Statistical Commission should take ownership of the accuracy and timeliness of official data. I am sceptical that another statutory body is required for this," said Balakrishnan.

Former statistical commission member, Amitabh Kundu said, “The data-generating ministries and departments of the government have not been clearly mandated to accept the suggestions of the NSC. Statutory support in this regard would be useful but that is not enough. It is more a matter of norms and practices. Unfortunately, not much has been done in the last few years to develop such practices."

“A larger number of members and at least the chairperson should be permanent, given the commission’s responsibility of overseeing the data generating system in the country and maintaining its independence and credibility" Kundu said.

In September 2010, the statistics ministry said in a release that it had used inappropriate deflators to arrive at constant price (at 2004-05 prices) estimate for the first quarter gross domestic product for fiscal year 2011.

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