Spooked by dodgy numbers

Pranab Mukherjee: 'Totally Baffling'

Pranab Mukherjee: 'Totally Baffling'  

One too many corrections at frequent intervals don't inspire confidence

The deficit is all pervading. And, it is growing all the same. Surely, Finance Minister Pranab Mukherjee has a huge worry on hand. He has to now handle deficit of two kinds. One, of course, is the familiar fiscal deficit. With the economy on a sliding mode and the Reserve Bank of India in a sulking mood vis-à-vis the rate cut, the clever Minister has to perforce walk on a razor edge. Caught as he is between a rising inflation, on the one side, and decelerating growth, on the other, climbing the deficit mountain could prove a gigantic task for him.

As though this is not enough, Mr. Mukherjee has to encounter a deficit of an unusual kind — the paucity of trust in government data. While releasing the provisional IIP (Index of Industrial Production) for January, the Ministry of Statistics and Programme Implementation pegged the growth at 6.8 per cent. On Thursday last, however, the Ministry revised the January IIP figure drastically downward to 1.14 per cent. This was attributed to errors in sugar production data in January. Sugar production for January was wrongly recorded as 134.08 lakh tonnes as against the actual 58.09 lakh tonnes. The blame game has already begun. The Directorate of Sugar in the Ministry of Consumer Affairs, Foods and Public Distribution was initially blamed for the error. Now, it has shifted the blame on Agriculture Ministry.

Totally baffling

A livid Mr. Mukherjee termed the IIP data revision ‘totally baffling'. And, predictably, he has ordered an inquiry into the slip-up. Obviously, such a huge ‘slip-up' (from 6.8 per cent to 1.1 per cent) cannot just be swept aside as a ‘simple clerical mistake'. Consequently, the cumulative index for April 2011-January 2012, too, has undergone a downward revision to 168 from 169. As a result, the cumulative growth during this period stood revised to 3.4 per cent from 4 per cent.

This is not the first time that ‘data error' is detected. In December 2011, the government admitted to a ‘goof-up' in trade numbers. Blaming it on software-related glitch, the government said the April-November 2011 export numbers were inflated by about $9.4 billion. The corrected export figure for the period was $192.7 billion. Imports for the period were $309.5 billion. The actual trade deficit was $116.8 billion as against the originally released figure of $107.5 billion!

Asserting that the “big picture on trends remains intact,” Commerce Secretary Rahul Khullar also admitted that there were some wrong estimates of trade numbers in certain segments. The margin of error was around 4-5 per cent on the export number.


“We, at the Reserve Bank of India, are handicapped by the reliability of some of the basic data that we need to use in policy calculations,” said Governor D. Subbarao, addressing the Statistics Day Conference in Mumbai on July 5, 2011. The data on wages and unemployment, in particular, “do not inspire confidence as regards quality,” he went on to add. IIP, especially, was a puzzle to him as “it has shown counter-intuitive trends” during December 2008-June 2009, a period when global crisis was at its peak. He also pointed to the volatility in IIP, which, to him, “is analytically bewildering”. The Governor did not mince words when he said, “our policy formulation is handicapped by frequent revisions to data.” RBI makes policies in real times and these are based on provisional data. “If these data are inaccurate, the resultant policies can turn out to be sub-optimal choice,” he put it succinctly.

With no less a person than the Governor of Reserve Bank voicing serious concerns about the quality of data, it is time the government gave a serious thought to beef up the statistical machinery if it were to get the ‘number credibility'. One too many corrections — that too major ones — at frequent intervals don't inspire confidence. The retrospective tax laws proposed in the recent Union Budget has already dented the overseas investors' confidence in India. With government dialling the wrong number quite often, the trust deficit has only widened.

Why you should pay for quality journalism - Click to know more

Recommended for you
This article is closed for comments.
Please Email the Editor

Printable version | Feb 26, 2020 1:27:09 AM |

Next Story