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Krishnamurthy Subramanian, the new Chief Economic Advisor (CEA), believes there should be a debate on data — be it on jobs or the economy — and that volatility is not necessarily an error.
“Data’s very important. I would be careful when commenting on numbers,” he told BusinessLine in an interview. “As an academic I can vouch for one thing — if you tell me to do something then I will think not twice but 10 times. That is generally in an academic’s DNA.”
The changes in the back series were done as part of a process to bring it more in line with the UN system to measure national statistics, said Subramanian. It was primarily done to be able to measure activities in a better way, to bring in a better proxy, he added.
Two-part phenomenon
“We have to remember that demonetisation and GST were a two-part phenomenon that expanded the formal sector,” he said. It is important to keep in mind that for any proxy, you would have to measure the activities before it, and the same would not be tuned well enough to be able to assess a shock that was completely unanticipated, he added.
On the controversy over jobs data, he said: “My preference is to comment on data that is released so that one can study and understand it.
“Therefore, I would go back to data that has been put out in the Economic Survey, for instance. If you take the EPFO data, it does not have data on firms having less than 10 workers and that is why it is underestimated in the sense of employment creation. If you remember, actually, 73 lakh jobs were created over a period of 15 months. So, this is something which I would like to vet.”
Read the full interview of CEA Krishnamurthy Subramanian here
Jobs data
The jobs debate has been a rather interesting one, said Subramanian. However, what matters is not a “50 basis point or 1 percentage point change in the employment rate, but the issue of meaningful employment”, he added. The data do not adequately cover the numerous activities in the unorganised sector, he observed. “Unemployment is not the bigger point to debate, it is the meaningful employment.”
The economist’s basic tool is demand and supply, said the CEA. “What you see as an equilibrium is an outcome of demand and supply,” he said. “So the numbers in the jobs data are an outcome of the supply side — the number of jobs which firms are creating, and the demand side — the number of people skilled enough to take those jobs,” he said, adding that while everyone is focussing on the supply side, the demand side question is not being asked.
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