Chief Economic Adviser to the Central government Krishnamurthy Subramanian asserted ‘revisions’ to GDP rate was due to new methods of obtaining information, especially for the manufacturing sector, from the Ministry of Corporate Affairs (MCA) of about 80 lakh firms towards a ‘better and broader’ way of measuring the growth rate as recommended by the UN system of national accounts.
“Earlier, we had been making use of data from the Index of Industrial Production (IIP) on factories with 80% production. Whenever there is a new data gathering system, there is bound to be some instability and certain operational things have to be ironed out, leading to revisions,” he said.
Dr. Subramanian was speaking on the sidelines of an international conference on ‘2030 Agenda-Role of Governance’ organised by Administrative Staff College of India (ASCI) and German Development Institute on Wednesday.
Touch points
Arguing that “creating a narrative from reality” is difficult when there are so many ‘touch points’ to the data being generated on the economy front from different sources, the CEA said usage of different proxies or benchmarks was taken up following recommendation by a committee led by a professor of Delhi School of Economics.
When the economy is changing so fast, there is a need for newer proxies, he said and implied it would take time to perfect the system. “It is a process of calibration but to attribute bias or motive is unfortunate as it requires time to understand the varied numbers coming up,” he said.
Dr. Subramanian also pointed out the last two quarters has shown GDP growth as low and it only showed there was never any effort to fudge the figures or data.
With regard to the controversy about high unemployment rate based on a ‘leaked’ report prepared by the National Sample Survey Office (NSSO)’s Periodic Labour Force Survey (PLFS) initiated in 2017, he said it was “misplaced”.
PLFS and Employment and Unemployment Survey “cannot be compared as sampling technique and objectives” were different. While the first one looked at employment in a family of having at least one member having passed 10th class in the formal sector, the second tracked household income and expenditure.
“If a person has cleared 10th class, he will clearly not go for a daily wage work but wait for a better job. So, unemployment is bound to be high among the educated, but giving it 75% weightage as against those not having a single family member passing 10th being given 25% gives misinformed narrative,” he said, adding that it is “very difficult” to get precise data from the unorganised sector world over.