Don’t politicise growth statistics! Statistics should be left to experts

By: | Published: December 7, 2018 1:44 AM

Statistics should be best left to experts. NITI shouldn’t superseded CSO authority

The new numbers downplay the growth of the economy in the UPA period.

We have been used to the CSO’s GDP series with the base year 2011-12. Quarterly preliminary estimates promised that agricultural GDP and manufacturing output will recover in the next quarter, but did not happen; these were forecasts and treated as such, and anyway we knew that, invariably, preliminary estimates get revised more often than not. To be fair, even in the preliminaries, there were exceptions and sometimes the CSO was right. Estimates were respected and, by and large, Indian statistics has an excellent reputation.

It is interesting that the vice-chairman of the NITI Aayog, himself an economist of some standing, used this information competently together with us. The director general of the CSO was selected by a search process that was chaired by an expert and the government kept on following time-honoured traditions in appointments; not interfering. An expert committee under the chair of the distinguished economist Sudipto Mundle, with some of the best statisticians that we have, again reviewed in some detail, made some revisions and, as in the past, we accepted them with good grace and used them, both for analysis and policy recommendations.

Last year saw many changes in traditions, most of them questioned by experts, including in this column. The first was the selection of the CSO chief by a committee headed by the Cabinet Secretary. A question in this practice did not necessarily mean comment on the abilities of the incumbent, but more a reflection of the unease on the change of the institutional process—for statisticians are a measuring rod and, as the Romans said, “who will guard the guards.” With the new structure, the expert committee on national income estimates has changed the series prepared by the Mundle committee. We can only comment on it after it publishes its observations or in the Revised Volume on Sources and Methods of National Accounts or some other scientific paper.

When the vice-chairman of the NITI Aayog goes back to earlier traditions to justify recent changes that have taken place, he does not mention the institutional conundrums that have taken place in the last few months, and that does lead to fair comment on his observations. The new numbers downplay the growth of the economy in the UPA period.

Much has been made of the need to synchronise our statistics with the UN system. This is a problem that one had the privilege of following through the decades, both from the Indian side as the chair of the National Income Advisory Committee as well as a consultant to UN agencies. This is a well-known problem in expert attempts to synchronise agricultural growth data on the quantitative side with national accounts, as also with global flow of funds and national accounts. Same problems arise for informal manufacturing sector. There have been many issues. For example, the Basel Convention required a calendar year for statistical estimates, and in India agricultural year is set with the kharif monsoon. Unlike other countries, India has had for long National Sample Survey estimates for household industry, which created comparability problems with industry census data. Also, there have been problems in reconciling NSS’s consumption data with National Accounts’ consumption estimates.

With due respect to the concern for consistency with global data systems and the touching reference to consistency problems, it has to be recognised that India is highly respected in UN Statistical Commission, and there has been recognition of the country as a leader in setting conceptual bases for statistics from developing countries. Also, global data-generating agencies always attempt at reconciling national statistics with global estimates by the colloquial expression of ‘massaging’ or changing national estimates for the sake of compatibility. Needless to say, this is always explained. A recent exercise of doing this for the agricultural sector on employment has been conducted under the supervision of Uma Lele and published by the Gokhale Institute of Politics and Economics. There is little justification of the NITI Aayog magisterially transcending the authority of the CSO and the ministry of statistics to release statistic estimates.

An interesting problem that emerges with the revised series is that the rate of capital formation has been revised upwards for the past, while the rate of growth of output has been revised downwards. In the famous 1951 classic by Oskar Morgenstern ‘On the Accuracy of Economic Observations’, consistency between alternative estimates of statistics was justified as a criteria to validate estimates—one more powerful argument to suggest that these issues are best left to experts, and not be politicised.

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