Ahead of 2019 Lok Sabha polls, economic data becomes the next political battleground
Once hailed for its rigor, the reliability of the government’s economic data is now under question as multiple changes have been made to how India uses and calculates crucial figures like economic growth and inflation.business Updated: Feb 27, 2018 15:46 IST
India’s planning to revise its data for key economic indicators again. And it has left economists shaking their heads.
Over the last few years, multiple changes to how India uses and calculates crucial data – from economic growth and inflation to jobs and taxes – has sparked a debate on credibility of government data once hailed for its rigor.
On Feb. 15 the government said it would again change the base year to 2017-18 to reflect changes in the economy, even as data scientists are awaiting comparable data for the 2015 GDP methodology revisions. That change, designed to capture taxes and the informal sector, resulted in a higher growth rate even as the overall value of goods and services shrank slightly.
With Prime Minister Narendra Modi seeking re-election in 2019, this data is now being targeted at voters. Modi’s recent claim that 7 million new jobs had been created in one year – one of his key election promises when he swept to power in 2014 – was countered by political rivals.
“Data is now being essentially politically massaged,” said Pranab Bardhan, professor emeritus at University of California. “The government is still the most dominant source of data. If it uses its resources to give out propaganda we’ll have a peculiar situation where the government is the only source of data but people don’t believe it. Of course it will affect elections.”
India is not alone when it comes to questions about its data. An analysis by Bloomberg Economics released on Feb. 1 found China’s growth rate in 2015 was probably overstated by “a couple of percentage points.” Comparisons with China grew louder after Modi’s sudden policy changes, including his decision to ban 86 percent of India’s currency to stamp out unaccounted wealth followed by a hurriedly-implemented nation-wide goods and services tax.
The Statistics Ministry’s National Sample Survey Office and the Central Statistical Organization, responsible for conducting nation-wide research including the economic census and jobs surveys, have been relying on part-time contractors to collect information as full-time jobs shrink amid limited financial resources. This has meant inevitable delays while the Central Statistics Office catches up with consumption trends.
And even as India makes crucial changes to its data, it is yet to find a replacement for its chief statistician T. C. A. Anant, who retired last month.
No Comparable Data
India’s economic revival is hindered by lack of reliable and quality data, according to a parliamentary finance panel. In December, it said the country’s unemployment data was “out-of-date and unrealistic”, and noted the consumer price index did not adequately capture rising cost of services such as education, health care and transport. Some economists now look at other indicators such as car sales and bank credit to take the country’s economic pulse.
Much of the criticism of the government’s last data revision rests on the fact that India economy’s suddenly appeared to be booming, and economists found it difficult to compare data over longer periods in the absence of a back series.
“Base revision is being done to capture new developments in the economy,” said T Rajeswari, an official with the statistics office. “Items which have lost relevance will be removed and some new ones will be added.” She noted the back series is taking time because there is no comparable corporate data.
The statistics ministry said it was developing a national policy on official statistics and plans to start new surveys to address the data gap and ensure regular flow of data for services and informal sector.
India is using tablets to input data for its first-ever real-time jobs survey, which is scheduled to be released in December, just months before national elections. India will release its full-year GDP data on Wednesday.
Yet it may be a while before economists are able to better read India’s economy, said Arun Kumar, professor of economics at Delhi’s Institute of Social Sciences. The government has yet to find a way to measure the impacts of policies like demonetization and GST on its vast unorganized economy.
“Anytime there’s a big change, it becomes tougher to read data,” said Kumar. “And there have been many shocks and changes in the recent years.”
First Published: Feb 27, 2018 14:26 IST