The focus is to capture economic activity more accurately, particularly in the unorganised sector, and move to updated bases using the latest technology. The initiative came after a series of meetings by NITI Aayog, ministry of statistics and other government agencies revealed major gaps that need fixing immediately to improve the quality of official statistics.
There have been fierce political skirmishes over official data with opposition and a section of experts questioning the higher growth figures in the tenure of the Modi government. Former chief economic adviser Arvind Subramaniam claimed that GDP was actually 2.5 percentage points lower than the official figures. Though criticism tapered as official figures reflected a growth slowdown, and Subramaniam’s assertion was questioned, the government felt the need to take a long, hard look at official data.
For instance, much of the services activity – which accounts for over half of India’s gross domestic product (GDP) – is largely estimated on the basis of the output of organised sector entities making up just a little over quarter of the sector. Of the 11 lakh active Indian companies, seven lakh are engaged in services.
In case of transport and restaurants segments, the situation is worse as the estimated output is based on an assessment of 15% of the entities, again in the organised sector. “What is happening in dhabas and small eateries is not captured,” said an official source. In certain cases, such as sugar, production is calculated on average yield data which is over three decades old.
When it comes to calculating agriculture produce prices, agencies depend on “farm gate prices”, which government economists admit is faulty given that it is now possible to get mandi rates of various commodities, as data is available online and increasing digitalisation is making information available more easily.
Similarly, when measuring the price of water as an input for farm production, the government goes by the budget spending number instead of looking at electricity supply for running tubewells as a proxy.
While data with the ministry of corporate affairs is seen to be reliable in measuring organised sector activity, sources said, the picture is different when it comes to capital formation or several other financial parameters where numbers may be deficient. For instance, value of land or paid-up capital does not often capture the market value, especially when the entity has been in business for years.
Sources said that successive statisticians have failed to implement recommendations of the C Rangarajan committee, which submitted its report during the Atal Bihari Vajpayee government. While the idea is to use that as a starting point, including enacting a legislation for which a draft bill has been floated for public consultation, the government is expected to rope in the World Bank to use global best practices. Besides, the states will be an important partner in data collection with technology to be harnessed, said sources familiar with the discussions.
The Rangarajan committee had recommended these steps, while pointing out data gaps and duplication leading to conflicting statistics and delay in transmission and publication of data. But over the last 19 years, the government has failed to act on a bulk of the recommendations.
Pronab Sen, who was the country’s first chief statistician, blames lack of resources for some of the problems. “A substantial number of recommendations of the Rangarajan committee have been implemented,” said Sen, who later became chairman of the National Statistical Commission. “You need more manpower. Getting additional resources in the government is a major problem,” he added. Sen is now heading a panel set up to revamp statistics.
Asked whether there was an underestimation of GDP as a result of the outdated parameters, Sen said: “You have no idea which way the bias is.” Another former chief statistician, who did not wish to be quoted, said a significant number of recommendations of the Rangarajan Committee had been implemented but the actual number cannot be computed.