Consumption expenditure survey: Government to scrap report over bad data
The ministry of statistics and programme implementation (MOSPI) has decided “not to release the Consumer Expenditure Survey (CES) results of 2017-2018” in view of “data quality issues”, it said in a statement.
On Friday, Business Standard released leaked findings from the 2017-18 CES which showed that inflation-adjusted average monthly per capita expenditure (MPCE) declined by 3.7% in the country between 2011-12 and 2017-18, a first in four decades. The decline came because of an 8.8% decline in rural MPCE even as urban MPCE increased by 2%. The report also quoted unnamed people as saying that the report had been withheld because of its “adverse” findings.
Hindustan Times couldn’t independently authenticate the details in the leaked report, or establish a reason for the government not releasing it.
The CES is a flagship survey of the National Statistical Office (NSO), formerly known as the National Sample Survey Office (NSSO), and is conducted every five years. The CES, in addition to being a source of information on consumption spending and inequality, is also used extensively in other statistical processes including revision of base years for calculation of GDP and the composition of the inflation basket.
The 2017-18 CES was scheduled for release in June. The previous CES was conducted in 2011-12.
On Friday evening, MOSPI put out a statement saying that “such submissions (the report) which come to the Ministry are draft in nature and cannot be deemed to be the final report”. The press release also says that “there was a significant increase in the divergence in not only the levels in the consumption pattern but also the direction of the change when compared to the other administrative data sources like the actual production of goods and services”, which is why the matter was referred to an expert committee “which noted the discrepancies and came out with several recommendations including a refinement in the survey methodology and improving the data quality aspects on a concurrent basis”.
The release also says that “the recommendations of the Committee are being examined for implementation in future surveys” and the ministry is “separately examining the feasibility of conducting the next Consumer Expenditure Survey in 2020-2021 and 2021-22 after incorporating all data quality refinements in the survey process”.
CES 2017-18 is the second major NSO report to run into controversy this year. Earlier this year, two non-government members of the National Statistical Commission, acting chairman P C Mohanan and J V Meenakshi, resigned over delays in publication of the NSSO Periodic Labour Force Survey (PLFS) for 2017-18. Leaked PLFS findings showed the unemployment rate in the country to be 6.1%, a four-decade high. However, the government released both the report and the unit level data subsequently.
The decision of not releasing CES 2017-18 will have important policy implications given its widespread use in calculating GDP and measuring inflation. GDP base year revisions coincide with the period of CES surveys. The government announced in February this year that it will be revising the base year for GDP and Index of Industrial Production to 2017-18. The base year of Consumer Price Index (CPI), India’s benchmark inflation measure, was to be changed to 2018.
“By delaying the CES to 2020-21, the GDP base year revision will have to wait till at least 2025”, said Abhijit Sen, former Planning Commission member. “The survey results will not be available until 2023, then a National Account Statistics Committee will look at it for another two years”, he added. “CES surveys are (also) essential in calculating the contribution of the informal sector to the GDP and deciding weight of various items in the CPI basket”, Sen said.
Previous CES rounds have also been subject to other kinds of controversy. For example, in 1999-00 the NSSO used a different recall period – the time span over which respondents were asked to recall their consumption of various goods and services – in its survey. Many economists argued that this made the results non-comparable with earlier rounds. Similarly, the United Progressive Alliance (UPA) government decided to conduct another CES in 2011-12 on the grounds that the results of the 2009-10 CES might have been affected because of it being a drought year. But the data for both rounds was published.
“There have been controversies regarding CES data in the past and I have been part of these controversies, but never has data been withheld and a report being junked”, Sen said. “In fact, the best way to resolve such controversies is to release the data transparently and let everybody who is familiar with such numbers, look at it”, he added. “The methodology of the 2017-18 CES is exactly the same as previous rounds. Is the government saying that all previous CES data cannot be trusted now? According to my knowledge, the expert committee did not find any calculation errors in the report”, Sen said.
“The Consumption Expenditure Survey is one of the oldest NSSO surveys. If the government is saying that there are data quality issues with the survey, it needs to explain how such issues have come up suddenly,” said P C Mohanan.
“The Periodic Labour Force Survey report too was withheld but eventually released. The CES was due for release in June and it has now been junked after its findings were leaked. Other reports are also not being released as per schedule. Reasons for such delays and non-publication have to be transparently conveyed. Otherwise it gives the impression that only statistics which are acceptable will be released and it is dangerous for the credibility of our statistical system”, he added.
“The words “own goal” do not even begin to capture the government’s mishandling of the NSO consumption survey. It could have easily written off 2017-18 as an unrepresentative year in which the economy was struck by both demonetization and GST. Instead, it has deepened the crisis in India’s statistical systems”, said Milan Vaishnav, director of the Carnegie South Asia Programme at Washington DC.