NEW DELHI :
The quality of crucial retail inflation data is likely to be compromised during the ongoing lockdown imposed to fight covid-19 as restrictions on movement and closure of non-essential business establishments are hampering the efforts of investigators who are trying to collect information.
Field investigators are to collect data of essential commodities either over telephone or during their visit to the nearest market for their own personal shopping, according to the standard operating procedure of the National Statistical Organisation (NSO) reviewed by Mint.
“The outbreak of covid-19 in India and subsequent measures implemented to limit its spread, particularly the national lockdown and the resultant temporary closure of retail outlets, total restriction on movement and the suspension of field work of NSO, have impacted routine compilation and dissemination of consumer price index (CPI)," NSO told field officials.
“CPI is an extremely critical macro-economic indicator regularly used by the government and the Reserve Bank of India for policy formulation. This calls for devising novel methods of data reporting, while ensuring that collection activities do not contravene emergency rules and recommendations issued by authorities and do not place staff at risk," it said.
Unlike data for factory output and wholesale price index, which are collected online, data for consumer price index requires field visits across rural and urban India every month.
The NSO decided to use alternative methods for collecting the data on an experimental basis for the first two weeks of April at a virtual meeting chaired by chief statistician of India Pravin Srivastava on 1-2 April. It was decided that information on prices of only essential items such as food, including that was available through the public distribution system, fuel, and housing, as well as essential items available at medicine and grocery shops, will be collected during the period.
NSO directed that no field visits should take place only for data collection and where possible data should be collected over telephone from specific shops to maintain continuity. However, if it is not possible to collect data from the regular shops, field officials may collect them from shops in the vicinity when doing their personal shopping, NSO said.
“They may telephonically ask friends/relatives to report the prices of sampled verities when they shop. No personal visit must be encouraged for this purpose," it said.
Getting prices from random shops will affect the quality of data quite a lot, said Pronab Sen, former chief statistician of India. “The reason data is collected from specific shops is because of the presumption that the trade margin would remain the same and consistent over time as each shop has its own supply chain and those costs remain the same. If a different shop that has a different supply chain is used, the price may vary simply because of the difference in margin and that will give a wrong reading," said Sen.
For non-essential items in the retail inflation index, the sensible thing to do is to assume that prices have not changed from the previous month, Sen said.