Don’t politicise MCA data, says Sanjeev Sanyal; GDP calculation always troublesome but better than before

By: |
Published: May 10, 2019 1:51:29 PM

Those debating over the credibility of MCA-21 data in the national accounts should read the Rangarajan Commission report released in 2001, Sanjeev Sanyal said.

Accepting the new data may have flaws, Principal Economic Advisor in the Ministry of Finance said that even the earlier system lacked perfection.

Even as questions are being raised over GDP calculations after NSSO discovered holes, the Principal Economic Advisor in the Ministry of Finance on Friday said ‘unnecessary politicisation’ of government’s every decision is unwarranted. Before questioning the new database, the critics must understand a wider context, Sanjeev Sanyal tweeted. Accepting the new data may have flaws, he said that even the earlier system lacked perfection. Those debating over the credibility of MCA-21 data in the national accounts should read the Rangarajan Commission report released in 2001 which highlighted several loopholes in the earlier system, he said, adding it’s an ongoing effort to “constantly upgrade the reading of the economy.”

A fresh debate got fuelled after the NSSO study conducted in the 12 months ended June 2017 and released last week said that nearly one-third of the companies that are part of MCA-21 database and used in GDP calculations could not be traced.

Also read: GDP data debate: Economists create own benchmarks as doubt on numbers stays

“Rangarajan Commission 2001 had suggested the use of a new dataset with Department of Corporate Affairs (now MCA) with 21 digit CIN. This was seen as an improvement on the older system”, he tweeted.

The government has made unparalleled efforts in the past few years to completely remove shell firms from the system, the economist said.  However, it’s not advisable to remove these companies for the purpose of national accounting as they may be capturing economic activity, even if they are not paying taxes, the former Deutsche Bank top executive also tweeted.

In June 2015, the MOSPI had launched a new series of national accounts with new methodology and data sources. The base year was also revised to 2011-12. The fresh calculations according to the new GDP series put UPA behind NDA on growth front in the period under review.

Do you know What is Wholesale Price Index (WPI), Public Debt, Finance Commission Grants & Other Transfers, Economic Survey, State Finance Commission? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.