Losing Credibility

There are many ways in which the Indian state has failed to develop sufficient capacity, but historically the gathering and availability of data has not been among them. Partly because of the colonial legacy and partly because of the power held by central planners in the early years after Independence, Indian economic data has largely been timely and reliable. This has added authority to government policymaking and directives and has also ensured a degree of accountability. However, in recent years, this is no longer completely true. Much has already been written, for example, about the back series computed for the gross domestic product (GDP) under the new method — the numbers neither pass a basic smell test of believability nor are they theoretically robust, given the questions around their use of deflators.

It is unfortunate that some of the most politically sensitive issues at the moment are also being discussed without there being good-quality data available to inform the conversation. What is worse is that these data releases seem to have been held up, delayed, or canceled. Consider, for example, the matter of foreign direct investment (FDI) in India. The government has often held up robust FDI numbers as a sign of the strength of the Indian economy. Yet, the Department of Industrial Policy and Promotion, or DIPP, has not, in fact, published data about FDI since August 2018, when it provided figures from the quarter beginning in April. This data from DIPP was previously made available on a quarterly basis. However, FDI had been slowing for some time. As a consequence, questions will be inevitably asked if the data is being held back because of a decrease in FDI flows, which does not reflect well on the government. This is not a good development.

There are concerns about the quality of the data available as well. For instance, a major point of debate and discussion at present is the question of unemployment and job creation. The Opposition has accused the government of not living up to the promises regarding job creation that were made during its successful general election campaign in 2014. The government, meanwhile, has pointed to several indicators — including the number of provident fund accounts — as a sign that employment is, in fact, growing. Ideally, this matter should be settled one way or another through the availability of good-quality, high-frequency survey data about both formal and informal employment. But, as a panel led by former chief statistician T C A Anant has found, quarterly enterprises surveys on jobs provided by the Labour Bureau suffer from poor coverage and quality. It has instead suggested that such surveys be scrapped and replaced by what would be a first-of-its-kind Employment Index, formed on the lines of the Index of Industrial Production (IIP) and the Consumer Price Index (CPI).

Several Union ministers and even the prime minister have complained about the paucity of good data about issues such as unemployment. As such, the government should renew its efforts not only towards alleviating the data drought where it exists but also boosting the quality of economic data. Otherwise, the current slide on the quality of data will also undermine policymaking and accountability.―Business Standard