Policymaking marred by incorrect data

The field of statistics is an exacting one involving a thorough scrutiny for accuracy and meticulous sifting of the chaff from the grain.

Its end-purpose is to provide as reliable picture as possible of the country's performance in various sectors. Policy formulation in government and strategic decision-making in the corporate sector rely heavily on the availability of relevant statistical data for the evaluation of the relative merits of the different courses of action.

India has always earned high praise in international forums for its prowess in collection, collation and presentation of data relating to implementation of policies, execution of schemes and projects and, generally, the various activities undertaken within its boundaries in every sphere.

Indeed, in academic papers, scholarly tracts and reports of governments and world bodies, it has consistently held the top position among emerging economies for the quality and dependability of its statistics.

However, there is no dearth of writings expressing, directly or obliquely, serious reservations, bordering on scepticism and even suspicion, about the figures included in the official compilations to emanate from China.

Fudging figures

That apart, quite a few of the member-countries of the European Union are also known to have manipulated the statistics regarding budgetary deficits, public debt and growth parameters so as to seemingly comply with the ceilings prescribed under the Growth and Stability Pact entered into by them.

So much so, in a recent report under the tell-tale heading “EU lets its members fudge statistics”, The Guardian had to warn “those at the top of the European Commission and at the heart of the EU” that they should make “lying about statistics…. much harder and Europe should find a way to ensure that no member has an incentive or a way to do it”.

India, fortunately, has never had to face any accusation, whether from within or without, of a deliberate fudging of figures. Mistakes, maybe, manipulation, definitely no. But there is a permissible margin for mistakes too, since too many of them occurring in too many areas may throw the entire the processes of governance into disarray.

India seems to be heading towards such a situation, judging from the alarm sounded by the Governor of the RBI, Dr. D. Subbarao, at the Fifth Statistics Day Conference in Mumbai on July 5, about the unreliability of much of the basic data disseminated by various statistical agencies.

GLARING EXAMPLE

Dr. Subbarao has included in his critique not only the index of industrial production (IIP) numbers (which, he said, showed “counter-intuitive trends”), but also the data on unemployment and wages, growth and inflation – all of which, he regretted, “do not inspire confidence (and) on some instances led to off-the-mark estimates on the economy…(and) policy miscalculations”!

The wide disparity between the provisional and revised figures to the extent of their being diametrically opposite in the assessment of the impact has been proving to be another source of confusion.

For instance, the provisional IIP for the period of the financial crisis was positive, but the final figure turned out to be negative.

A more glaring example was the revision of the IIP number for December 2010 to 2.5 per cent from the provisional estimate of a paltry 1.6 per cent. Dr Subbarao is right about the dangers of letting such inaccuracies and mistakes continue, but he has not proposed any concrete solution to remedy the state of affairs.

This is too important a matter to be mentioned casually, without initiating adequate and appropriate measures to make the statistical data reliable and valid, and available in time.

The new Minister of State with independent charge of the Ministry of Statistics and Programme Implementation, Mr Srikant Jena, can leave a mark by taking it up as a challenge.

He could entrust the formulation of a plan for ensuring the quality and reliability of statistics to a Task Force of eminent experts. He could also consider raising the status of the Central Statistical Office, which is now seen as a mere unglamorous appendage, to that of a new National Statistics Development and Dissemination Authority.

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