Economic Data: Where the State abdicates and market fails

Lack of recent consumption data has created a vacuum in knowledge about India’s consumer economy. The pandemic-induced disruption has added to the need for high-frequency data. That India’s official agencies do not even offer recent data has created a bigger problem

Informed economic commentary requires timely and quality data. Collecting this takes resources and skills. While India’s statistical establishment has had some important gaps, its databases have always enjoyed credibility. Unfortunately, things have gone south on this count. India does not have consumption expenditure data after 2011-12. A survey carried out in 2017-18 was scrapped, perhaps due to political considerations, after leaked findings suggested a fall in per capita spending.

Representational image. (Shutterstock)

Lack of recent consumption data has created a vacuum in knowledge about India’s consumer economy. The pandemic-induced disruption has added to the need for high-frequency data. That India’s official agencies do not even offer recent data has created a bigger problem. This has increased reliance on private sector statistical databases. Some, such as the Centre for Monitoring Indian Economy’s (CMIE) capital expenditure and prowess databases, have been used for long. However, others such as the CMIE’s Consumer Pyramid Household Survey’s (CPHS) – the only source of high-frequency data on employment and consumption at the moment – have seen a big jump in use. The data itself has also created controversy. To its credit, CMIE is willing to engage with the criticism, is transparent about its methodology and offers unit-level data. But it comes at a price.

Data collection is a high-cost exercise. If collected with a commercial motive, there is an in-built incentive to focus on what buyers want. Many private economists have argued that the bottom 20-30% of the economy does not matter as far as purchasing power is concerned. Unsurprisingly, undercounting the really poor is an important criticism of the CPHS data. The State alone can address this issue, by collecting and releasing data in a timely fashion without worrying about its marketability. Until that happens, it will be difficult to understand India’s consumer economy.