Ex-Finance Minister P.Chidambaram wants to clear up global scepticism over the reliability of official data in India.
Congress wants to review how economic data is collected and interpreted if it wins the general elections.
“A Congress government would tackle the deficiencies in data collection. We would have to set up a high-powered committee. First, to look at what went wrong with the data, and to clean up the data collecting and data interpreting process,” P. Chidambaram, former Finance Minister, GoI and Senior Party Leader, Congress
- Economists and investors globally have expressed a loss in confidence in India’s official economic data.
- Recent controversies over revisions and delays of crucial numbers have further fuelled the scepticism.
- As per a 2017 study, up to 36 percent of companies in the new database for GDP calculations are either untraceable or wrongly classified.
- Economists have also voiced concern about the government changing the model of GDP calculation in 2015.
There were further apprehensions when the government revised GDP growth for 2016/17 – after the PM Modi-led demonetization drive disqualified 87% of high value currency in circulation.
The effects of demonetization came as a big blow to the heavily cash-dependent economy.
Economists not using government’s numbers
Because of the mistrust created over the past couple of years, economists and investors are no longer using government data. Instead projections are based on fast-moving indicators such as car sales, air and rail cargo shipments, purchasing managers’ index data, and in-house proprietary indices to track the Indian economy.
The Modi government acknowledged deficiencies in its data collection, but assured that the deficiencies have no impact on GDP estimates.
Reviving the National Statistical Commission
Ex-Finance Minister Chidambaram also intends to revive the National Statistical Commission. He alleged the NSC has been unable to work independently under Modi Government’s pressure. Chidambram opined:
“Selecting the right people for the job was also important. I don’t think legal backing will make a difference. What is important is the kind of people who are put there, and the kind of independence that they are given.”
The government-funded advisory NSC is tasked with scrutinizing the integrity of official data. Recently its current and former commission members have come out and voiced concerns that the commission needs complete autonomy to improve data standards.