Economists' warning signal: To regain India's data credibility, govt should withdraw faulty GDP back series, release NSSO job numbers

Perhaps more than the concerns of slowing growth, what is probably hurting the Indian economy even more now is the widening trust deficit on country’s official data, particularly on the Gross Domestic Product (GDP) growth and employment/unemployment. The loss of faith on key data published by the government has been there for a while, but India’s failing data credibility is now no longer confined to the local press but a subject the world has taken note of. That’s what reflects in a letter released on Thursday by 108 economists and social scientists calling for restoration of “institutional independence” and integrity to the statistical organisations in India freeing critical data releases from the clutch of damaging ‘political interference.’ The group has appealed to economists, statisticians and independent researchers to come together to raise their voice against the tendency “to suppress uncomfortable data” and impress upon the government to restore access and integrity to public statistics and re-establish institutional independence. Now, what’s the significance of this letter? It tells us that the world has already formed an opinion that something is amiss on the way India presents its statistics. As the economists have pointed out in the letter, in the past too, there have been questions on India’s official numbers — but that was on the quality of estimates not for political interference that seeks to change the whole estimates itself to suit one’s narrative. India, internationally, was respected for its data credibility. [caption id=“attachment_5047261” align=“alignleft” width=“380”] File image of Prime Minister Narendra Modi. Reuters[/caption] Where did the trust deficit begin exactly? The first instance was in 2015 when the GDP base year was changed to a new base year 2011-12 from 2004-05 and the gross value added (GVA) methodology was introduced. The sudden spike in growth under the new base year and methodology for the years of 2012-13 and 2013-14 compared with growth under the earlier series raised many eyebrows, also due to the fact that the GDP figures began to stand in isolation with a host of crucial high-frequency economic data. Since then, during every quarter when GDP numbers came, questions were raised on this disconnect and the underlying signal the new GDP numbers intends to convey. Then came the GDP back series data in 2018. In one go, the growth under the United Progressive Alliance (UPA) years, which were till then seen as high-growth years, were lowered under the changed methodology used for the new back series. The new back series may put the National Democratic Alliance (NDA) at an advantageous position since the average growth for FY06 to FY12 now comes to 6.9 percent (new series) from 8.2 percent (old series) and inferior to the 7.4 percent under the Narendra Modi-led NDA rule.

In FY 2011, the growth figure has been sliced by 180 basis points to 8.5 percent from 10.3 percent. Remember, these figures were also criticised the figures that were sharply different from the findings of an expert panel set up by the National Statistical Commission under Sudipto Mundle.

The Mundle series showed that the GDP growth had actually touched the double-digit mark, India has been desperately hoping for, in 2006-07. That year, the growth touched 10.08 percent against 9.57 percent when calculated under the old methodology, it said. Congress loved and BJP discarded the Mundle series. India’s data credibility once again came under attack. Citing an instance wherein the Central Statistics Office (CSO) revised upward the GDP growth estimates for 2016-17 (the year of demonetisation) by 1.1 percentage points to 8.2 percent, the highest in a decade, the letter said: “This seems to be at variance with the evidence marshalled by many economists”. That being the GDP story, the next round of attack on India’s data came when the Narendra Modi government refused to release the results of the latest surveys on the employment count in the country. The National Sample Survey Office (NSSO) which conducts household surveys on employment situation wasn’t given permission to release job data that showed the country’s unemployment rate at a 45-year-high of 6.1 per cent in 2017-18, a Business Standard report said adding that to speculation that the government is either delaying or hiding data that isn’t favourable to its performance record. It is a fact and even the NDA’s ardent supporters would agree, that these three instances have severely damaged India’s data credibility. How can Narendra Modi government regain the lost credibility of India’s official data on growth and jobs? The answer is simple. First, the government should, at least now, show the political courage to withdraw the controversial GDP back series that has no link with the reality on the ground and let the CSO rework the back series numbers independently from the NITI Aayog which shouldn’t be in data compilation in the first place. Second, the government should immediately release the NSSO survey on jobs and admit the outcome. Of course, these won’t be easy for the government in an election year but that’s the only way to restore India’s data credibility problem.