GDP calculation: Data gaps will be resolved, says govt
The NSSO report, findings of which were first published in Mint on Wednesday, found that 36% of the companies in the MCA-21 database maintained by the ministry of corporate affairs (MCA) could not be traced or were wrongly classified.Updated: May 09, 2019 05:07 IST
The ministry of statistics and programme implementation (MoSPI) has downplayed the controversy around India’s gross domestic product (GDP) data after a National Sample Survey Office (NSSO) report raised serious questions on the quality of the MCA-21 database, which is used in India’s GDP calculations, triggering political accusations of data manipulation.
The NSSO report, findings of which were first published in Mint on Wednesday, found that 36% of the companies in the MCA-21 database maintained by the ministry of corporate affairs (MCA) could not be traced or were wrongly classified.
India’s new GDP series, which was published in January 2015 and moved the base year from 2004-05 to 2011-12, uses the MCA-21 database to calculate the country’s economic output. The earlier series did not use this database, which is only available from 2006-07 onwards.
An MoSPI statement issued on Wednesday said the NSSO survey was commissioned to understand the data gaps in the MCA-21 database and take remedial steps.
The statement also said these issues will be resolved in the proposed revision of GDP figures to the 2017-18 series and added that “the results of this NSS Report will be further examined by the Advisory Committee before finalising the approach and methodology for the proposed 2017-18 series”.
The statement also downplayed the impact of the gaps. “It is emphasised that there is no impact on the existing GDP/GVA (gross value added) estimates for the corporate sector as due care is taken to appropriately adjust the corporate filings at the aggregate level based on the paid up capital,” it said.
The ministry also clarified that the 2011-12 series had been using the corporate sector data available from the MCA in its estimates and the ministry had conducted the survey to find out the veracity of the data used.
What the NSSO survey has revealed is that a large number of companies in the MCA-21 database are shell companies, Dr Pronab Sen, India’s former chief statistician, said. This does not mean that their economic output should not be included in the GDP figures, and hence there will not be a big impact on headline growth figures.
However, a large presence of shell companies in GDP inputs can give misleading ideas about the sectoral composition of the GDP as the parent company which has shifted its books to a shell company might have done so in a completely different sector, he added.
The Opposition attacked the government , accusing it of fudging crucial data. “To cover up their gross mismanagement of the economy, which has cost us growth and jobs, the government is now indulging in doctored statistics. Numerous experts have raised questions on revised GDP numbers and how they have been calculated. Now we can see that these figures have been raised on a foundation of falsehood and fake companies. To look good and to fool the people, the integrity of our reputed statistical system is in peril. That is one more system just destroyed,” Congress MP and chairman of the party’s research department, Rajeev Gowda, said.
Left parties criticised the government for overestimation of growth. “It is now clear that growth has been overestimated to misguide the people. This is straightaway manipulation of data and therefore a fraud being played on the people,” said Tapan Sen, a politburo member of the Communist Party of India (Marxist).
Sen said institutions like the Central Statistics Office (CSO) had acquired great credibility over the years but it had been compromised because of “[Prime Minister Narendra] Modi’s style of functioning which is aimed at manipulating all institutions”.
Communist Party of India leader D Raja said his party has demanded and also pledged in its manifesto “statutory status” for the CSO to protect it from manipulation. “The government makes tall claims about GDP numbers but the macro-level claims don’t match with micro-level reality,” Raja said.
Bharatiya Janata Party (BJP) spokesperson Gopal Agarwal said that at times surveys had limitations with regard to sample size and selection of questionnaires, and their sequence. “All these have a bearing on the final conclusions. Therefore, proper checking and verification is required without which the quality of data will suffer,” he said.