India's statistics system has been a mess. The PMO is looking in. | Mint

India's statistics system has been a mess. The PMO is looking in.

India's official data has come into question over the last few years. (Waseem Andrabi/Hindustan Times)
India's official data has come into question over the last few years. (Waseem Andrabi/Hindustan Times)

Summary

  • After concerns over GDP calculations and covid deaths, PMO is taking steps to improve the domestic and international confidence in India’s statistical system

The Prime Minister’s Office (PMO) has begun an important stock-taking of India’s statistical system in the wake of several controversies related to official surveys and estimates, according to two persons aware of the discussions in the government.

Some of these controversies were around the reliability of growth estimates, delays in conducting some economic surveys and the census, comprehensiveness of sampling methods, and the gap in the number of covid-19 deaths estimated by India and the World Health Health Organization.

Officials from the statistics and finance ministries are part of the effort led by PMO officials, one of the two persons said. Some discussions have already taken place, and the next meeting is scheduled for the first week of February, said the person on the condition of anonymity.

The initiative is based on a paper titled The State of India’s Statistical System prepared by the Economic Advisory Council to the Prime Minister (EAC-PM), which has drawn policymakers’ attention to the need for reforms in this area.

“One key question to be addressed is the timing of the reforms," the person said. Policymakers have to decide if a decision on this matter needs to be taken before or after the general elections.

Emails sent to the spokespersons for the PMO, NITI Aayog, finance and statistics ministries as well as the National Statistical Commission (NSC) seeking comments remained unanswered. EAC-PM chairman Bibek Debroy declined to comment.

The stock-taking at the highest level of government signals a possible revamp in the future to raise both domestic and international confidence in India’s statistical system. In a paper published in 2021, researchers from Indira Gandhi Institute of Development Research and National Institute of Public Finance and Policy (NIPFP) had said that using MCA21 data of firms in the 2011-12 series of gross domestic product (GDP) figures could lead to inaccurate estimation of sectoral growth rates although not of the overall gross value added (GVA), a measure of value addition in the economy. Earlier, data from the annual survey of industries (ASI) was used.

The stock-taking is based on policymakers’ view that robust statistics is critical for measuring the effectiveness of policies and the country’s progress.

One area of review is shortening the time period for releasing final GDP figures for a given year, which now takes as many as three years and multiple updates, said the second person, who also spoke on the condition of anonymity.

EAC-PM had also highlighted in its paper the need for making GDP deflators used in computing real GDP more comprehensive. GDP deflator, a measure of inflation in the economy, is used in measuring GDP adjusted for inflation.

India at present does not follow double deflation or adjusting the prices of both raw materials and the output for inflation, a more consistently reliable way of accounting national income followed in many other countries. That is done with the help of a producer price index, which, according to the first person, was recommended by the EAC-PM paper.

Experts said with India’s rising global stature and heft, there is a need for higher investments in elevating the country’s data collection exercises, survey methodologies and the standards of dissemination, matching the global best.

“India is now among top five economies in the world and aiming to be among the top three, contributing significantly to global growth; so, we must invest more in manpower, digital tools and advanced statistical systems so as to make our data and statistical abilities stand out in the world and not merely conform to global standards," said Sachchidanand Shukla, group chief economist at Larsen & Toubro Ltd.

Shukla also said modern indices, such as Google Trends for gauging inflationary pressures and other such analytical tools and benchmarks, need to be weaved into India’s statistical ecosystem. “It is also the right time for us to consider using a producer price index (PPI) that mirrors the cost or the price for producers like in all the advanced economies."

Officials are expected to study the concerns around reliability of data, independence of the statistical system and the autonomy of statistical institutions in the approval and publication of data, as EAC-PM paper had sought the attention of policymakers on these issues highlighting public debate around them.

NSC, an apex advisory body to the government on statistics and policymaking, had said in its 2017-18 annual report that it needs to be strengthened and given due importance with statutory support, for it to play its expected role.

Amid an apparent delay in the release of the Periodic Labour Force Survey (PLFS) 2017-18, the then NSC acting chair P.C. Mohanan and a member J.V. Meenakshi resigned in January 2019.

The survey, which suggested unemployment rate of 6.1%—apparently the highest the Indian economy had faced in 45 years—subsequently got leaked to the media before the government published it on 31 May 2019. It would be unfair to compare the unemployment figure in the 2017-18 report with those in past reports due to its new design, The Indian Express reported after the survey was released, quoting an official.

Experts said a key metric for the robustness of the statistical system is its independence and at its heart lies the free hand professional statisticians need in deciding on statistical matters without bureaucratic intervention.

“The point is that the Indian statistical system is no longer as independent as it used to be," said Pronab Sen, former chief statistician of India. NSC should be further empowered to improve the independence of the statistical system, explained Sen.

Release of the new series of GDP data had triggered debates in the past over the methodology involved.

Former chief economic adviser Arvind Subramanian in 2019 claimed that the changes adopted in the estimation of India’s GDP for the period since 2011-12 had led to a “significant overestimation of growth". The ministry of statistics and programme implementation (Mospi) then responded saying that the GDP growth projections brought out by various national and international agencies are broadly in line with the estimates released by Mospi and that these estimates based on accepted procedures, methodologies and available data objectively measured the contribution of various sectors in the economy.

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