The Data Debate: What’s Worrying 108 Of India’s Top Economists
Foreign investors have often worried about the quality of economic data in emerging markets, including China. But that’s one problem that India never had. The strength and correctness of Indian economic statistics may have often been debated, but their integrity has rarely been questioned.
This has changed over the past year. Questions have been raised about politicisation of economic statistics ranging from GDP to unemployment.
On Thursday, 108 economists and statisticians put out a note urging that agencies associated with the collection and dissemination of economic statistics should not be subject to any political interference.
The economists cited two specific instances that have caused them to worry about the credibility of Indian statistics — the debate over the back-casting of a new GDP series released in 2015 and the government’s decision to withhold the periodic labour force survey conducted by the National Sample Survey Organisation.
Economic statistics are a public good and are essential for policymaking and an informed public discourse, said a release signed by these economists.
The use of scientific methods for collection, and estimation and their timely dissemination, therefore, form vital public services. It is, thus, imperative that the agencies associated with collection and dissemination of statistics like Central Statistical Office and NSSO are not subject to political interference and their work, therefore, enjoys total credibility.Letter Signed By 108 Economists
BloombergQuint spoke to a few of the economists who have joined the appeal to restore sanctity to Indian economic data and the processes followed in collecting and disseminating it.
R Nagaraj, Indira Gandhi Institute of Development Research
R Nagraj, who was one those who spearheaded the campaign, said the concerns over sanctity of economic data have been simmering among economists for some time. “This view that official numbers are increasingly at variance with reality is increasingly felt by economists. When some of us mooted this idea of a campaign, we discovered an overwhelming response to our appeal,” Nagraj said.
In particular, the variance in two different methods of back-casting the 2015 GDP series worried Nagaraj. In August 2018, a committee of the National Statistical Commission released one version of the back-casted data for the GDP series. This, however, was dismissed by the government and another ‘official’ back-casted series was released.
The difference between the two was a change in the implied growth rates under the UPA and the NDA governments. The official series also did not sync with other indicators, as BloombergQuint had analysed at the time.
Nagaraj said that back-casting of the GDP series should have been a mundane exercise conducted as per standard procedure. But it proved to be otherwise.
The CSO did not do it for three years and then we suddenly found that there are two back series, both showing divergent figures for growth over the last decade. This left users puzzled and the explanation for the official estimates have not been adequately forthcoming which only added to the public view that these figures are politically motivated.R Nagraj, IGIDR
Arjun Jayadev, Azim Premji University
Despite being a developing economy, India has a well thought through system of collecting economic data, Jaydev told BloombergQuint in a phone conversation. While ‘political footballing’ in the case of economic statistics is not unheard of, recent instances have been troubling, he said.
Commenting on the back-casting of the GDP series, Jaydev said that constant revisions have been concerning. Apart from the debate over the back-series, recent revisions in the series have also led to an abrupt change in annual growth rates. In particular, growth during the year of demonetisation was revised sharply higher to above 8 percent.
“We understand the need for constant revisions in maintaining continuity, however, maintaining accountability, due process and transparency is important,” Jayadev said. He also emphasised that the rate of growth of an economy is not entirely in the hands of any government. As such, bouquets and brickbats for growth rates cannot completely be laid at the doorstep of a political administration.
Jayan Jose Thomas, Indian Institute of Technology - Delhi
The economists are not alleging that data is being tampered with, clarified Jayan Jose Thomas, associate professor of economics at the Indian Institute of Technology, Delhi. But questions of methodology, particularly in the back-casting of the GDP series, certainly need to be answered, he said.
Thomas was equally worried about the government’s decision to withhold the NSSO’s employment and unemployment report.
“Without a proper employment estimate, we will have reasons to doubt the growth in the informal sector,” Thomas said.
Reetika Khera, Indian Institute of Management - Ahmedabad
It isn’t just the employment statistics that are being withheld, added Reetika Khera of IIM-Ahmedabad.
“The government has been sitting on several data series such as data over sanitation, suicide numbers etc. This government is also the first one to say that there is a problem with NSSO data,” Khera said.
She raises another concern -- the adequacy of data collection staff. Vacancies within the data collecting organisations are also serious, possibly affecting timelines and quality of data, Khera said.
“Researchers are left working in the dark or relying on other sources of data that were earlier only supplementary to government data, which is forms the backbone,” Khera added.
Amiya Kumar Bagchi, Monash University
Amiya Kumar Bagchi, a well-know political economist, struck a more emphatic note.
“There is no question that the Central government has been interfering with the work of expert economists and statisticians. Two of the experts, who were members of a committee to look at the state of employment, resigned in protest against the government's interference,” he pointed out.
India lost 11 million jobs in 2018 alone. The total employment today is lower than in 2013. India’s official rate of unemployment at 7.6 percent (which is a gross underestimate because it does not take account of underemployment ) is higher than at any time since 2000. The government’s own figures show that India’s GDP growth rate has slowed since 2015. Now it is trying to massage those figures by arbitrarily changing the base year, without providing any rationale for it.Amiya Kumar Bagchi, Monash University
Bagchi added that it is necessary to preserve the integrity of the economic system in order to preserving transparency in a democracy.
Mritiunjoy Mohanty, Indian Institute Of Management - Calcutta
Mritiunjoy Mohanty from IIM-Calcutta said that debate among economists on the interpretation of economic data is common. What is happening now has gone beyond that.
“We have set out three or four instances where the data itself has been constantly revised and the variations in the revisions have not been adequately explained,” Mohanty said. “Every time your narrative doesn’t fit and you revise the data, you call into question the data itself.”
Mohanty, too, pointed to the frequent revisions in the GDP data and the decision to withhold the employment survey, which, according to him, is more worrying that the message in the statistics itself.
Watch a debate on the sanctity of economic data below: