Restore data credibility

It is welcome news that a high-level panel under former chief statistician Pronab Sen has been set up to examine currently used surveys of employment, industry, and services. These surveys are essential inputs into various major official statistics, in particular the estimates of gross domestic product (GDP). The 28-member committee has its work cut out. India’s official statistics have recently been widely questioned, as on occasion they seem to work at cross-purposes with other high-frequency indicators of the economy. More worryingly, their credibility and independence from political interference have also come under fire. Government choices in terms of concealing some data — such as a recent round of the National Sample Survey — have not helped in dispelling these concerns. The setting up of this committee, as well as its chairmanship by Dr Sen and the inclusion of other academics who have questioned official statistics recently, might go some way towards recovering and repairing the reputation of Indian data.

 

Much, however, will depend upon what the panel feels empowered to do and how transparently it can restructure the statistical system. The committee has been told to examine various government data sets — such as its surveys of industries and service sector enterprises, of the labour force, and the widely watched index of industrial production, among others. While the committee’s remit might appear limited to ensuring the data sets square with one another and are broadly consistent, as well as to identify gaps in data collection, it is also supposed to oversee the finalisation of the survey reports and to determine problems in the compilation of administrative statistics. This means that it has, if it so wishes, relatively broad powers to overhaul India’s statistical approach. It is important that the government accepts what disinterested experts have to say. There are major problems with the statistical system that are regime-agnostic and need to be addressed. A case in point is the divergence in consumption between what is shown by the consumption survey and what is revealed by the national accounts. The GDP calculation, which perhaps overstates the formal sector through the use of Ministry of Corporate Affairs data, will also need to be looked into. Other crucial details will include how deflators are calculated and whether the corporate data is being extrapolated correctly.

 

The government has released draft legislation that intends to put the National Statistical Commission on a secure legal footing as the apex body for national statistics. It is to be presumed that the Standing Committee on Economic Statistics will discuss and evaluate what must be done to conduct immediate repairs and then create a blueprint for future reform on data collection and analysis, and the National Statistical Commission will be in charge of implementing it on a consistent basis. What is important, however, is that the institutional footing and powers of the NSC be sound. It should be independent and autonomous as well as having the powers to oversee the distribution and release of officially collected statistics, so that there is no longer any suspicion that inconvenient statistics are being concealed or manipulated for political reasons by the government or its bureaucrats. The NSC Bill does not go far enough.

 

 



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