India's economic data under a cloud

THE carefully-crafted image of Prime Minister Narendra Modi as an economic reformer who would power the Indian economy to new heights is fading. Slowing GDP growth, industrial decline, sputtering exports, and unemployment at a 45-year high is worsened by a blackout of economic data and "political interference" in the country's statistical agencies.

An influential group of 108 economists and social scientists in India and the West is urging the government to restore integrity and access to the economic data, and to end its "political interference".

When Mr Modi was campaigning for the position of prime minister in 2013, he declared that if his Bharatiya Janata Party came to power, it would create 100 million jobs by 2022. The promise is yet unfulfilled as only about 823,000 jobs have been created in India till October 2017, according to the International Labour Organization (ILO), and most of them are classified as vulnerable employment as they are not regular, full-time jobs.

The rebuke from the group of 108 academics comes as an embarrassment to the ruling BJP just ahead of the general election to the Indian parliament in April and May in which the economy is emerging as a dominant issue.

In a letter titled "Economic statistics in a shambles: Need to raise a voice" and released on March 14, declared that "it is imperative that the agencies associated with collection and dissemination of statistics like Central Statistical Office (CSO) and National Sample Survey Organisation (NSSO) are not subject to political interference and their work, therefore, enjoys total credibility".

The Indian and Western professors include Pranab Bardhan (University of California, Berkeley), Esther Duflo (Massachusetts Institute of Technology), Jean Dreze (Allahabad University), Maitreesh Ghatak (London School of Economics), Dilip Mookherjee (Boston University), Debraj Ray (New York University), James Boyce (University of Massachusetts at Amherst), Emily Breza (Harvard University), and Arun Chandrasekhar (Stanford University), among many others.

The government is maintaining its blackout at a time when the Indian economy is losing momentum. According to the privately-run Mint Macro Tracker, out of 16 macroeconomic indicators, only four were in the green (above the five-year average) as of January 2019, while eight indicators were in the red (below the five-year average). The performance is much worse compared to six months earlier.

The domestic consumer economy is hurting due to declining automobile and tractor sales, and weakening air passenger traffic. The foreign trade indicator is also in the red, as sluggish export growth and rising gold imports have widened the trade balance. Small-scale exporters are still recovering from the dual shocks of demonetisation and goods and services tax, indicating that exports will remain in crisis.

Notably, the government stands accused of suppressing the country's unfavourable employment data because of fears of losing the vote of the unemployed youth,

The group of 108 noted that the government did not keep to its schedule to release the results from the NSSO's Periodic Labour Force Survey (PLFS) last December. In protest of the suppression, two members of the National Statistical Commission (NSC), including the acting chairman, subsequently resigned because they felt the NSSO was delaying the release of the report, which the NSC had already cleared.

Soon afterwards in January this year, the NSSO revealed that the unemployment rate rose to a 45-year high during financial year 2017-2018, in the most comprehensive survey it conducted since the Modi government shocked the country with demonetisation in November 2016. The unemployment rate of 6.1 per cent was the highest since 1972-1973. It was 7.8 per cent in urban areas, and 5.3 per cent in rural areas, in the recent NSSO study.

NEW GDP SERIES

Said the professors : "This perhaps explained why the government did not want to release the report. There have since been news reports that the PLFS of 2017-18 will be scrapped altogether by the government."

They are concerned that "any statistics that cast an iota of doubt on the achievement of the government seem to get revised or suppressed on the basis of some questionable methodology".

Since the government never officially released the unemployment data or accepted it, the professors are perturbed by the damage being done to India's image. "For decades, India's statistical machinery enjoyed a high level of reputation for the integrity of the data it produced on a range of economic and social parameters," the professors pointed out. Although "it was often criticised for the quality of its estimates, but never were allegations made of political interference influencing decisions and the estimates themselves", they said.

"Lately, the Indian statistics and the institutions associated with it have, however, come under a cloud for being influenced and indeed even controlled by political considerations."

In early 2015, the Central Statistics Office issued a new GDP series (with the revised base year of 2011-12), which showed a significantly faster economic growth rate for the financial years 2012-13 and 2013-14 compared to the earlier GDP series. "These revised estimates were surprising as they did not square with related macro-aggregates," they declared.

They believe that the government's estimates of recent GDP growth are dubious. With every new release of GDP numbers, more problems with the base-year revision have come to light, they note. The CSO's revised estimates of GDP growth for 2016-17 (the year of demonetisation), shot up by 1.1 percentage points to 8.2 per cent in January this year, "the highest in a decade". This data goes against the evidence gathered by many economists.

Last year, the NSC and the CSO separately prepared two competing back series for varying lengths of time - showing opposite growth rates for the last decade. The NSC's numbers were removed from the official web site and the CSO's numbers were later presented to the public by the government's advisory body, the Niti Aayog, which "has no expertise in the collection of statistical data".

The professors are deeply concerned that "the national and global reputation of India's statistical bodies is at stake". More than that, "statistical integrity is crucial for generating data that would feed into economic policy-making and that would make for honest and democratic public discourse", they added.

But it looks like the BJP government is continuing to ignore domestic and international appeals, as it hunkers down to contest the general election next month.