Corporate Affairs Ministry’s Database Fairly Reliable, Not A Black Box, Says Official
The corporate affairs ministry maintains a fairly reliable database that is not a “black box”, a senior official said on Thursday and emphasised that it is up to statistical authorities to decide on which data is representative for GDP calculation.
Against the backdrop of concerns over data used for calculating GDP numbers, Corporate Affairs Secretary Injeti Srinivas asserted that the ministry’s MCA 21 portal is a “trust-based system” as the information reported there are company disclosures.
A report by the National Sample Survey Office on the services sector found that nearly 36 percent of companies in the MCA 21 system that were used in computing GDP were either not traceable or not classified properly.
MCA 21 is an electronic repository of corporate filings.
The information reported on MCA 21 are company disclosures and companies have to validate it. It is a trust-based system. We have been alive to this problem of data reliability and have been continuously taking steps for making it highly reliableInjeti Srinivas, Secretary, Corporate Affairs Ministry
Filings under the Companies Act are submitted to the corporate affairs ministry through the MCA 21 system. As far as the ministry is concerned, Srinivas said MCA 21 is a “fairly reliable database and certainly not a black box. It is a highly transparent platform and one of the best in the world”.
He also said that what data is representative for GDP calculation and what needs to be used, is a matter that has to be decided by statistical authorities concerned.
There were around 15 lakh active companies incorporated on the MCA 21 and the number has come down to 11.5 lakh in the last two years after the names of around 3.5 lakh companies were struck off due to non-filing of statutory returns for two years or more.
Noting that the drive against companies that are not making required filings is a continuous process, Srinivas said the ministry initiated Know Your Client process for companies about two months ago.
“With the KYC process, the details about companies, including the company's registered address and geographical information (latitude and longitude details), directors, KMPs (Key Managerial Persons)... are getting revalidated. Around 5 lakh companies have so far complied with the KYC process,” he said.
Under annual KYC process for directors introduced last year, around 17 lakh directors validated their data. However, an equal number of such people failed to do so and their Director Identification Numbers have been deactivated by the ministry.
According to the corporate affairs secretary, severe restrictions are being imposed on KYC non-compliant companies.
“These include barring them from changing their registered address, revising authorised capital, inducting or removing directors and restraining them from carrying out merger and acquisition. Besides, banks are also cautioned that they should be careful in extending credit to non-compliant companies,” he noted.
On Wednesday, the Ministry of Statistics and Programme Implementation said an official committee would examine the technical report on services sector enterprises.
“The recent exercise of the National Sample Survey to bring out a technical report on the services sector was commissioned by the ministry to understand the data gaps and take remedial steps while undertaking the new base revision exercise for the proposed 2017-18 series,” the ministry had said in a statement.
The ministry had also noted that there is no impact on the existing growth 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.