A credibility gap in India’s statistics

Discussion in 'Economy & Infrastructure' started by nrj, May 11, 2012.

  1. nrj

    nrj Stars and Ambassadors Stars and Ambassadors

    Nov 16, 2009
    Likes Received:
    Of late, the statistical system is being questioned by the same officials who are supposed to protect it

    Never has the statistical system of the country been in such crisis as it is now. The system’s crisis of credibility has stemmed from the series of mistakes reported in the last one year with multiple sources of data. It has also suffered from a credibility crisis by politicization of statistics by the official machinery and by vested interests in the press and academia. The trend of disowning or maligning data sources that are not comfortable for the government of the day is now increasingly becoming a regular affair rather than a one-off instance.

    The worrying feature of the statistical system, however, is the magnitude and the types of errors that have been reported in most of our statistics at the central level. Recent examples include the misreporting of sugar production in the Index of Industrial Production (IIP) data. This led to a revision of IIP for January, forcing the government to make a downward revision in the growth rate of industrial production from 6.8% to 1.1%. A similar error was reported in case of export data where exports were overestimated by $8 billion due to a software glitch. Even for the gross domestic product (GDP) data, the numbers were revised in July after it was pointed out that the deflators did not make any sense.
    The governor of the Reserve Bank of India has already complained about the quality of data made available and the inconsistency problems arising from frequent revision of data. Similar apprehensions have been voiced by a parliamentary standing committee recently. These issues require careful oversight and monitoring along with analysis of the trend over time to pick out the outliers in the data before it is released for public dissemination.

    These are technical matters and can only be addressed over a period of time. The politicization of statistics is, however, something that needs to be taken far more seriously than these technical issues. The independence and fairness of our statistical system is not only recognized within the academic community in India but also worldwide. Unfortunately, of late the same statistical system, which has been built over a long period of time, has been questioned by the same officials who are supposed to protect it.

    The campaign to malign data on employment-unemployment surveys when the results of the most recent round (2009-10) were first reported by this newspaper was unprecedented in nature. The sharp criticism on this count came from some of the highest officials of the country, including those who are custodians of this system. Rather than explaining the lack of employment creation, the effort was to discredit the data. A similar campaign has been on for years to malign consumer expenditure data by citing the gap between estimates of consumption from the National Sample Survey Office and the National Accounts System. This issue has been examined in detail a number of times, most recently by the National Statistical Commission (NSC). Again the effort has been to deny the trend of growing inequality seen from the consumption expenditure surveys despite unprecedented GDP growth of more than 8% in recent years. Recent attempt by the Planning Commission to hide the inclusion of midday meal expenditure as part of private consumption expenditure is another example.

    This trend has now expanded to the issue of inflation measurement. The fault: the new consumer price indices which are based on more realistic weighting pattern, coverage of centres and commodities, have reported higher inflation than what was reported by the previous consumer price indices. The facts about the new consumer price indices have been known for more than two years now. The recent attempt is nothing else but a mischievous attempt to malign the new data series even before it has stabilized. Surely, the same data would have been welcomed had it shown lower inflation. A clarificatory article by two senior officials from the ministry of statistics has not only shown the truth but also exposed the misuse and misreporting of data to malign the new indices. Not to be left behind, a mischievous attempt to pass off the average consumer expenditures as poverty estimates was eagerly lapped up by the media in search of another controversy.

    But the media can hardly be blamed for the mess that has been created and fostered by our own officials. The credibility deficit, that has been created partly because of the glaring errors but also because of the unnecessary politicization of the data, will lead to more scepticism about the official data. So much so that today nobody trusts our employment estimates, industrial production estimates, inflation estimates and certainly not the ones on poverty. The state of affairs can be gauged by the simple fact that a report submitted after four years of rigorous work by the former chief of NSC and chairman of Prime Minister’s economic advisory council was dumped even before it could be operationalized due to media and political pressure.

    It is time that those responsible for maintaining these systems work with the academia and the media in restoring confidence in data that is the so important for policymaking purposes. Otherwise, it will not only remain a statistical artefact but will also lead to questions about the very basis of governance if the fruits of governance are shown to be statistically irrelevant.

    Himanshu is assistant professor at Jawaharlal Nehru University and visiting fellow at the Centre de Sciences Humaines, New Delhi

    A credibility gap in India’s statistics - Views - livemint.com
    Nagraj likes this.
  3. Nagraj

    Nagraj Regular Member

    Jan 7, 2011
    Likes Received:
    The system which is supposed to measure is itself malfunctioning .
    How are we supposed to take decisions based on these output.
  4. parijataka

    parijataka Senior Member Senior Member

    Oct 15, 2011
    Likes Received:
    Export figures have been said to be inflated by comparing the actual industry data and that reported by govt. Explanations have been given as exporting and re-importing the same products for different reasons and also as illegal funds being funnelled back i.e. kind of hawala. I will post the link later.
  5. sehwag1830

    sehwag1830 Tihar Jail Banned

    Dec 23, 2011
    Likes Received:
    When Congress is in power anything can happen.
    I don't trust India's gdp data now.
  6. Sakal Gharelu Ustad

    Sakal Gharelu Ustad Detests Jholawalas Moderator

    Apr 28, 2012
    Likes Received:
    1. The IIP number is definitely a big error, because the difference between 1.1 and 6.8 is almost 6 times. There is no way this can happen due to one industry i.e. sugar industry in this case. The IIP considers a fairly large number of manufacturing industries(more than 500 products), so am sure there is some error on the part of reporter. Either s/he does not know anything about IIP or has not reported all the facts.

    2. Export data has a 8billion error. But again, India has around 400billion exports and 8billion constitutes around 2% error. Given normally these estimates are usually revised over time to get exact figure, I do not think there is a huge error even in this case. If it were clear whether it was a preliminary or final estimate, things would be much more clear.

    3. I did not get what the guy meant when he said GDP deflators do not make any sense. It would have been better to get more detail over here by explaining the non-sense part of it.

    4. CPI and other similar stuff are subjective stuff and people always keep arguing about how it should be constructed. So there is no error on the statistics front in this case. Rejecting a subjective indicator for some reason is not equal to claiming statistical misreporting.

    There is no need to read any further into this article as I believe this is a piece of trash written by another ignorant economist.
  7. cir

    cir Senior Member Senior Member

    Dec 28, 2010
    Likes Received:
    A look at last year's trade data, which were subject to huge amendments, says it all about the credibility of Indian statistics.

    Indian GDP deflators have been known to be overstated for years.
    Last edited: May 12, 2012
  8. trackwhack

    trackwhack Tihar Jail Banned

    Jul 20, 2011
    Likes Received:
    Yes, though, when coming from a Chinese guy, it stinks real bad.
    Koovie likes this.

Share This Page