Government agency reveals new gaps in India GDP data
Unusual criticism adds to suspicions that Modi is trying to spin country’s statistics
May 8, 2019
A database used by India’s statistics office to calculate GDP figures is riddled with gaps, according to a report by another government agency, raising fresh questions about the credibility of the country’s economic data.
In a report published on its website, the government’s National Sample Survey Office said 39 per cent of the companies included in a key database used to estimate India’s economy activity and GDP growth were closed, untraceable or misclassified.
The findings, first reported by the Mint newspaper on Wednesday, represent an unusual criticism by one government agency of another at a time when international confidence in the accuracy and reliability of India’s publicly reported GDP data has come under scrutiny.
Narendra Modi’s government has been accused by the opposition Congress party and leading economists of trying to spin the country’s data to claim that the country has performed better under his stewardship than during any other Indian administration.
The NSSO, which is part of India’s ministry of statistics, carries out large-scale, household surveys to gather data on a wide range of variables from social economic indicators on health, education and intermarriage to economic activity. It is a sister agency that sits alongside the Central Statistics Office, which is responsible for producing official economic statistics including GDP figures.
The NSSO found that 21 per cent of companies included in a database underlying India’s GDP numbers were “out of coverage”, implying they were no longer operating. Another 12 per cent could not be traced.
Since the database’s introduction under Mr Modi in 2015, it has been used to underpin upward revisions of growth figures. At the same time, growth estimates under the previous Congress-led administration have been downgraded.
The revelations come amid mounting suspicion among independent economists and civil society figures of the politicisation of India’s statistics agencies, which have historically been seen as credible and non-partisan. Analysts have argued that the changes made in 2015 are at the root of India’s increasingly unreliable official statistics.
The report solves an “enduring mystery surrounding the divergence between India’s brisk GDP growth figures and more sluggish high-frequency, micro-data”, said Milan Vaishnav, director and senior fellow at the Carnegie Endowment for International Peace, a think-tank. “The fact that GDP figures were constructed on the back of such questionable corporate data raises doubts about the judgment of India’s top statistical body not to mention the credibility of India’s statistical system as a whole.”
Such doubts have been expressed by leading figures from official agencies and academia. In January, senior members of the National Statistics Commission, an autonomous body set up in 2005 to raise data collection standards, resigned, leading to the body’s de facto collapse. In March, 108 economists published a joint statement demanding that the administration “re-establish institutional independence and integrity to the statistical organisations”.
In a report released on Tuesday, Goldman Sachs analysts noted the significant challenges in measuring economic activity given India’s sizeable informal sector and large services industry. “We believe that the ongoing GDP debate in India is better viewed as a statistical discourse than as a political one.”
When asked to comment on the report, a spokesman for the Ministry of Finance referred the Financial Times to a Facebook post from March 19 by Arun Jaitley, finance minister, in which he called questions on economic data “fake campaigns” and referred to critics as “compulsive contrarians”.
The NSSO did not respond to a request for comment.
Additional reporting by Jyotsna Singh
Unusual criticism adds to suspicions that Modi is trying to spin country’s statistics
May 8, 2019
A database used by India’s statistics office to calculate GDP figures is riddled with gaps, according to a report by another government agency, raising fresh questions about the credibility of the country’s economic data.
In a report published on its website, the government’s National Sample Survey Office said 39 per cent of the companies included in a key database used to estimate India’s economy activity and GDP growth were closed, untraceable or misclassified.
The findings, first reported by the Mint newspaper on Wednesday, represent an unusual criticism by one government agency of another at a time when international confidence in the accuracy and reliability of India’s publicly reported GDP data has come under scrutiny.
Narendra Modi’s government has been accused by the opposition Congress party and leading economists of trying to spin the country’s data to claim that the country has performed better under his stewardship than during any other Indian administration.
The NSSO, which is part of India’s ministry of statistics, carries out large-scale, household surveys to gather data on a wide range of variables from social economic indicators on health, education and intermarriage to economic activity. It is a sister agency that sits alongside the Central Statistics Office, which is responsible for producing official economic statistics including GDP figures.
The NSSO found that 21 per cent of companies included in a database underlying India’s GDP numbers were “out of coverage”, implying they were no longer operating. Another 12 per cent could not be traced.
Since the database’s introduction under Mr Modi in 2015, it has been used to underpin upward revisions of growth figures. At the same time, growth estimates under the previous Congress-led administration have been downgraded.
The revelations come amid mounting suspicion among independent economists and civil society figures of the politicisation of India’s statistics agencies, which have historically been seen as credible and non-partisan. Analysts have argued that the changes made in 2015 are at the root of India’s increasingly unreliable official statistics.
The report solves an “enduring mystery surrounding the divergence between India’s brisk GDP growth figures and more sluggish high-frequency, micro-data”, said Milan Vaishnav, director and senior fellow at the Carnegie Endowment for International Peace, a think-tank. “The fact that GDP figures were constructed on the back of such questionable corporate data raises doubts about the judgment of India’s top statistical body not to mention the credibility of India’s statistical system as a whole.”
Such doubts have been expressed by leading figures from official agencies and academia. In January, senior members of the National Statistics Commission, an autonomous body set up in 2005 to raise data collection standards, resigned, leading to the body’s de facto collapse. In March, 108 economists published a joint statement demanding that the administration “re-establish institutional independence and integrity to the statistical organisations”.
In a report released on Tuesday, Goldman Sachs analysts noted the significant challenges in measuring economic activity given India’s sizeable informal sector and large services industry. “We believe that the ongoing GDP debate in India is better viewed as a statistical discourse than as a political one.”
When asked to comment on the report, a spokesman for the Ministry of Finance referred the Financial Times to a Facebook post from March 19 by Arun Jaitley, finance minister, in which he called questions on economic data “fake campaigns” and referred to critics as “compulsive contrarians”.
The NSSO did not respond to a request for comment.
Additional reporting by Jyotsna Singh
