Govt shouldn’t junk unpleasant data

Biswajit Mandal/Saswati Chaudhuri | Updated on March 17, 2020 Published on March 17, 2020

Suppressing data that point to low growth, rising joblessness and poverty impedes effective policymaking in a crisis

Finance Minister Nirmala Sitharaman, in her Budget speech, said “data is the new oil” and stressed on the credibility of data to combat the difficulties in real-time monitoring of the Indian economy. She even proposed building data centre parks throughout the country so that skilful incorporation of data in every step of the value-chain can take place.

However, in spite of such demagogy concerning the role of data, the Finance Minister was not able to shrug off the controversy surrounding ‘data’. Discrepancies were reported in the budgetary allocation for certain schemes, which were then covertly corrected. Refusing to learn from past experiences, the Finance Minister yet again relied on overestimated growth assumption of gross tax revenue.

The projection is 12 per cent, which is way higher than the estimated nominal GDP growth of 10 per cent. Last year, the gross tax revenue grew at a meagre 4 per cent while nominal GDP grew at 7.5 per cent.

In the Budget speech, the Finance Minister emphasised on 10 per cent nominal growth rate of GDP without mentioning what the real GDP could be. This must have been done to keep the masses in the dark about the recent declining trend in GDP figures. The coronavirus debacle deepens the mystery!

The muzzling of data has not been a new strategy for governments at the Centre, but the perturbing thing is that it still continues.

How it started

The government has in recent years been facing public ire for not releasing comprehensive jobs data regularly. The story started when the NSSO’s 2017-18 Periodic Labour Force Survey (PLFS) stated that the unemployment rate hovering around 6.1 per cent was a 45-year high since 1972-73.

A more worrying aspect, it said, was the workforce seemed to have shrunk by 47 million between 2011-12 and 2017-18. The figures were further substantiated by the household surveys of CMIE reporting that unemployment rose to 7.2 per cent in February 2019.

The government could not handle such plummeting statistics and decided to call the findings of PLFS a ‘draft’ and was conveniently junked. The people at the helm of the survey — the head of the National Statistical Commission and another independent member — apparently resigned and refused to term their final report a draft.

The government started to resort to all kinds of irrelevant and unrelated statistics to stake claims as evidence of job creation. Amongst them, the growth in the number of registered members of the Employees’ Provident Fund Organisation (EPFO) and growth in the number of subscribers to the National Pension Scheme stand out as poor indicators of job creation. While the former can only point to the increasing formalisation of jobs, the latter might indicate greater adoption of the NPS scheme rather than creation of jobs. The government decided to document the employment-generating potential of MUDRA loans, which is in fact a refinancing scheme that re-routes the priority sector lending to non-corporate, non-farm small/micro enterprises.

However, in a bid to stifle inconvenient data, the Enterprise Survey Report was put under scanner, which reports that a significant chunk of India’s registered firms are bogus entities. That said, in the case of both the PLFS and the enterprise survey, the release of the reports was not stalled. But the fear within was manifested when the National Sample Survey Organisation (NSSO) report (76th Round) was withheld from release.

A draft of the Consumer Expenditure Survey 2017-18 from the aforementioned National Sample Survey Organisation (NSSO) report, was leaked to the press a few months back. It shows that the average per-capita monthly spending, adjusted for inflation, fell by 3.7 per cent to ₹1,446 in 2017-18 from ₹1,501 in 2011-12; per-capita spending in the rural areas fell by 8 per cent and in the urban areas increased by 2 per cent. Food spending also contracted in the rural areas (Thalinomics is in force!).

The data also indicated that nearly 32 per cent of the population could have been living in poverty in 2017-18, which is around 10 per cent more than in 2011-12. All these caused the government to panic and it hastily junked the survey. This NSSO report is not the only one to be junked. Two other employment-specific reports under this category — the Annual Employment-Unemployment Survey (EUS) and Quarterly Employment Survey (QES) — were also discarded. The official explanation given by the MOSPI authorities in support of rubbishing the NSSO data was the significant divergence and direction in the consumption patterns when compared with other administrative data sources. However, this divergence is neither new nor startling.

A simple argument can be put forth to explain such divergence: administrative data are generally production data generated by government agencies. Textbook macroeconomics teaches us that total production may be consumed domestically, exported or stored as inventories. However NSSO’s is a consumption survey of households. This obviously results in the divergence between a household consumption survey and administrative data.

Why the knee-jerk reaction

It seems that the main reason for not accepting the consumer expenditure data of NSSO is the ensuing embarrassment staring at the government’s face. The real consumption expenditure had shown a declining trend in 1960-1966, and it was not a surprise as the economy was in doldrums with a food crisis conundrum. A declining trend was also observed for a fleeting period in 1973-74.

However, this time, the case is awkward as the period from 2011-12 to 2017-18 marks a glorious economic era of annual growth rates of a little more than 6 per cent.

A sense of deja vu

In the past too, the Indian government had withheld the release of data and discontinued surveys. A case in point is the 2004-05 Demographic and Health Survey (DHS) data, which showed high incidence of infant mortality, stunting and underweight.

The NSSO data was also not bereft of controversies. Perhaps, previously data was never denied to the public, rather they were given a fresh lease of life by ordering a re-survey. This is best exemplified by the 27th round of NSSO (1972-73) which was followed by the 28th round of NSSO (1973-74), possibly because 1972-73 was a drought year.

It can also be recalled that the 66th round of the NSSO’s household consumption expenditure survey for 2009-10 also came in for a lot of flak because of its flawed poverty estimates. It was also controversial because it showed that employment generation had not reached the targeted figures enshrined in the Eleventh Plan. The UPA government had rubbished the report and had ordered a fresh one. Hence, it comes as no big surprise that 2017-18 NSSO Survey was suppressed by the present government.

The suppression of such essential data will ultimately harm the government as it would be prevented from devising appropriate strategies and policies to rejuvenate the economy.

Mandal is Associate Professor of Economics, Visva Bharati University, Santiniketan, and Saswati Chaudhuri is Associate Professor of Economics, St Xavier’s College, Kolkata

Published on March 17, 2020

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