The Politics of Growth Data

The Politics of Growth Data
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Suspicions of how our statisticians measure the economy are misplaced

UNTIL SOME YEARS ago, economic growth statistics were a boring matter. A sleepy government department would release them on pre-set dates, there would be some commentary on the op-ed pages of newspapers, and all would be forgotten until the next numbers were released. It was dull and predictable. Not anymore. Instead of ebbing, controversy rages two days after the release of estimates for India’s economic performance in 2016-17. Statisticians and economists are done with their quibbling over the quarterly and annual estimates of growth, but opposition politicians refuse to play ball. Much of it has to do with the growth numbers for the year’s third quarter (October to December). Demonetisation took place in the middle of this period and was supposed to have hit commerce hard, particularly the informal sector. The move was expected to dent overall economic growth during this period. Instead, at 7 per cent, there seems no sign of any setback caused by a cash crunch.

The figure has acted as a proverbial red rag for the opposition, mainly the Congress, whose leaders have dubbed the growth numbers ‘highly suspect’. In casting doubt on official statistics, the party has politicised India’s statistical machinery, even though its target is the Modi Government. Not only is this unfair, it also demonstrates Congress frustration when events don’t turn out the way the party expects.

Within weeks of high-value notes being scrapped, former Prime Minister Manmohan Singh had said in the Rajya Sabha that India’s GDP growth could fall by 2 per cent. This was before any estimates were possible, let alone being available. This was followed by his other party colleagues painting a dire picture of the Indian economy after ‘notebandi’. When figures did become available—with the second advance estimates released on February 28th—the picture is at great variance with what the Congress had expected.

It is possible that the final growth data will be revised, as India’s former chief statistician Pronab Sen has said. But that speaks of infirmities in India’s statistical machinery and not some political game as the Congress is hinting. India has never experienced nor encouraged Soviet-style massaging of data. In a democracy, the fudging of figures can never be hidden, and if any such attempt is made, it would come back to haunt those who do it. There’s no reason to accuse our statisticians of being politically motivated.