The statistics ministry’s decision to start the All-India Household Consumer Expenditure Survey in July this year after a gap of nearly a decade is a welcome relief for data-based policy-making. The quinquennial survey’s 2017-18 findings were junked by the government over “data quality issues”, making the 2011-12 edition the last official one. Indeed, without an updated estimate of household spending, estimation of poverty in the country has become rife with controversy, as the debate over the numbers forwarded by the International Monetary Fund and World Bank working papers showed. Given the 2017-18 survey was reported to have found that the monthly per capita spending by households had fallen from the 2011-12 levels, there were allegations of “adverse outcomes” pushing the Centre’s hand. The government has to ensure that this time around, the data doesn’t leave scope for any politicisation. Indeed, some have argued that instead of scrapping the 2017-18 data, it should have been released with a detailed explanation from the government on what exactly the flaws in the collection methodology were and how they impacted the findings.
A fresh survey could then have been commissioned later for a clearer picture. The present dispensation should have taken a cue from what the United Progressive Alliance government did. It did a fresh survey in 2011-12 to measure employment and consumer spending levels afresh, after the 2009-10 surveys were affected by the global financial crisis and a severe drought that hit rural incomes. The government must keep in mind that it doesn’t have this option in case the new round yields data it might find difficult to savour, as it will be incorporating “data quality refinements” suggested by an expert panel that had reviewed the 2017-19 findings.
In 2019, the Centre had cited “significant increases in the divergence in the levels in the consumption pattern” and “the direction of the change” compared with data sources like the actual production of goods and services, as also the ““ability/sensitivity of the survey instrument to capture consumption of social services by households especially on health and education”. The government must publish the exact “refinements” the new round will incorporate well ahead of the survey’s commencement, allowing for vetting by independent experts. This would be in the interest of its own credibility as well as the country’s as an investment destination. Decisions such as postponing of unflattering jobs data before a general election show the country is unflattering light. Such practices are best left to the likes of China and North Korea, whose official data is often treated as a tool for propaganda. If the robustness of data comes under question, it is only natural that independent/private data sources will be increasingly relied upon.
To enjoy the credibility that is due to market-economies in a globalised world, India needs to ensure that it assess its economy more frequently, transparently and with unimpeachable methodological robustness. The new survey round should also trigger a revision of the fundamentals underlying important indicators of the economy’s progress. Apart from allowing for revision of the base for gross domestic product estimation, the dominos should fall for a reassessment of the consumption basket of families. There has been a sea-change in this, but some of it has gone unrecorded so far. An indexation of consumer prices that is more in tune with the times will better inform a raft of policy decisions, including at the Reserve Bank of India when it comes to rate-setting. After all, the headline consumer price index-based inflation rate is the nominal anchor for monetary policy and it is important that the index reflects the true picture. India must not only avoid data opacity, but also fight getting saddled with data obsolescence.
