The government has a problem with statistics

Hampering the release of economic data because it is unfavourable sets a dangerous precedent

108. That’s the number of social scientists and economists who have alleged that the current government has interfered with agencies and institutes which deal with data collection & dissemination. This is not the first time this government has faced such charges, it is simply the latest in a long line of complaints.

How did we get here?

Abrasions first arose when the government shifted the base-year for GDP calculations and then published revised as well as inflated GDP growth numbers for past years.

Subsequently, they also changed the source of data for the manufacturing sector citing that value addition was not accounted for by the previous source.

However, things came to a head early this year when the acting chairman of the National Statistical Commission (NSC), along with another colleague, resigned as a sign of protest at the delay in releasing job statistics data.

The data, which is crucial to determining the health of the economy has been delayed for several months now by the Niti Aayog and will likely only be released after May, conveniently after the general elections.

What is the issue?

The economists allege that the current government is ‘suppressing uncomfortable data’ such as the crucial figures of employment and unemployment released by the NSSO. Additionally, several other data series such as sanitation data and suicide numbers are being withheld.

“The use of scientific methods for collection, and estimation and their timely dissemination, therefore, form vital public services. It is, thus, imperative that the agencies associated with collection and dissemination of statistics like Central Statistical Office and NSSO are not subject to political interference and their work, therefore, enjoys total credibility.”

- From the letter signed by 108 economists

They are widely calling for independence of institutions and political non-interference in functioning. They are also worried about the authority handling the data, as the CSO (Central Statistics Office) numbers were presented by the Niti Aayog, which has no expertise in statistical data collection.

The main point of discontent is the methodology being used by the current government, in terms of back-casting of GDP series and holding of scheduled data releases.

Why is this a problem?

Statistical data is of utmost importance and so is statistical integrity. The data published by the statistical institutes feed into economic policymaking and make for honest as well as an informed public disclosure.

Let’s deviate a bit and take the example of China:

China’s economic data has been under suspicion for a long time now. Ranging from an unusual variation of only about 20 basis points in the data on a QoQ basis to a lack of transparency over methodology adopted by the government, the GDP growth hardly misses or exceeds its target. Not that this outrightly displays that the government is cooking the books, but the uncanniness of the growth numbers raises doubt about the same.

China ranks among one of the largest economies of the world, however, if the government released statistics come under suspicion, it does not ring a good bell among the investor community. Even rating agencies are failing to recognize the red flags of defaulters, a work currently being taken up by independent rating agencies.

Now, let's get back to our economy:

The government has time and again been part of controversies accusing it to have meddled with the functioning and autonomy of various institutions ranging from the central bank to statistics office. Questions are being raised about the ‘politicisation of economic statistics’.

P C Mohanan, former acting head of the NSC, stressed that “even during the economic reforms of 1991 no one questioned the survey reports which displayed increased poverty figures”.

This government’s continuous efforts to withhold crucial data, as it will tarnish its image, is a cause of concern.

While it is understood that regular revisions are essential to retain continuity, equally important is maintaining accountability and transparency. Any interference with the integrity of economic statistics organization gives out a warning sign to the investor community. It implies that data can no longer be trusted.

What does this mean for us?

If the government continues to interfere with institutes of statistical importance, that would imply that the data being presented is fudged and will stoke a decrease in confidence in government data.

Such an act only reduces the reputation of the country among the global investor community and questions the integrity of economic statistics which is essentially a public good.

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