Statistics has often been equated with lies, which is unfair. But it may not be too far off the mark to say that statistics do not tell the whole truth. The 0.8 per cent contraction in factory output for the month of April must have led to much hand-wringing in the North Block. After all, the government had just been telling the whole world about how India was the shining beacon in a world economy struck by anaemia. This, especially after the Central Statistics Office growth figures of 7.6 per cent for 2015-16 released recently. The CSO itself had put manufacturing growth for 2015-16 at an astonishing 8.75 per cent. But the IIP figure for 2015-16 was at a much more modest 2.5 per cent.
Discrepancies in the data have come in for much comment in the media as well as in academic circles in the recent past. Now it is known that the IIP data is compiled from addition of output whereas GDP data captures value added. This explains some of the divergence but not in its entirety. Chief Statistician TCA Anant has said, in recent media reports, that IIP’s database is old — 2004-05 base year — which explains the downward bias in factory output.
How IIP tracks growth
Business daily Mint had an interesting report on how IIP’s tracking of a fixed group of entities also leads to an underestimation of growth. The report cites the example of how the Nokia factory near Chennai was tracked by CSO but has been shut since November 2014 and how this contributed to the negative bias in factory output. The silver lining here is that the new IIP series with 2011-12 as base year is scheduled to be launched by the end of the year.
But the CSO numbers too have come in for criticism by not only independent analysts but also government economists such as the RBI governor and the Chief Economic Advisor, who have raised doubts about it in the past. But for all the discrepancies in data, it would not be fair to accuse the government economists of fudging the numbers or window-dressing them, as alleged by some commentators.
The late Ronald Coase, an economist and Nobel laureate, is reported to have said that if you torture data hard enough it will admit to anything. So, a healthy measure of scepticism may be in order while looking at economic data.
A historical look
India has a long history of collecting economic data. The Census apparatus left behind by the British also helped in no small measure. Though there is evidence of statistics being collected by kings in Kautilya’s Arthashastra and during the Mughal period, the first Census in India in the modern era was conducted in 1872. Though the Census was conducted between 1865 and 1872, the first synchronous Census was conducted in 1881 and has been conducted every 10 years since then.
After Independence the government set up the Central Statistical Unit in 1949 which became the Central Statistical Organisation in 1951. PC Mahalanobis built the statistical edifice of independent India and PV Sukhatme was the pioneer in agriculture statistics.
The National Sample Survey (NSS) was formed in 1950 to collect socio-economic data with the help of extensive sample surveys. In 1957, the CSO also became responsible for collecting industry statistics.
Most important Ministries such as Industry, Labour, Agriculture and Commerce have their own statistical wings that collect data. The State governments too have their own statistical departments and collect data on agriculture, health, etc. The Directorate of Economics and Statistics at the Central level coordinates with the State wings for collection and compiling of data.
At the State level, statistical abstracts and handbooks of States, annual surveys on industry and agriculture, and other reports are published regularly.
The National Sample Survey Organisation conducts household and enterprise surveys and collects vital data on expenditure and consumption patterns of households as well as other important economic facts and figures. It also carries out field work for the Annual Survey of Industries. The NSS is perhaps the largest survey of its kind in the world, covering millions of people.
The setting up of a National Commission on Statistics as an independent organisation, accountable to Parliament, has been suggested to improve the quality of statistics in the country.
So, despite all the controversies regarding economic data and the ritual hair-splitting over it, India is perhaps one country which has the most sophisticated statistical structure outside the developed countries’ club. Like most other institutions, though, the country’s statistical body too is in need of rejuvenation.