(Edited Image Courtesy: data.gov.in)

 

“Is the primary aim of a statistical service to provide the data the Government (that is, the current political leadership) requires or is its mission broader? The question is a real one,” says a United Nations Working Paper (WP) released way back in 1994.

Significance of this seminal work titled ‘Politics and Statistics: Independence, Dependence or Interaction?’ to Demonetization-hit India would become real to anyone who reads it with an open mind.  

WP contends: “a statistical service must find ways of being responsive to new or altered needs for data. At times such needs are explicitly articulated. At other times they must be inferred from current or anticipated political debates.”

This should ring in as wake-up call for Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation (MOSPI) that blissfully shunned the word ‘demonetization’ in its 15-page Press Note dated 28th February 2017. The same call should have stirred conscience of Ministry of Labour & Employment’s Labour Bureau (LB) which has not assessed the impact of demonetization on labour market. 

The failure of these two premier statistical organizations to collect data on demonetization’s impact is contrary to United Nations’ Fundamental Principles of Statistics that every NSO/statistical service is supposed to follow as its dharma. We discuss the significance of these principles in Indian situation later in this column. 

The computation of gross domestic product (GDP) has come under fresh, intense scrutiny. Stakeholders across the world are pitching for improvement in its quality & reliability.

The four major factors propelling the urge for GDP reform are: 1) persisting uncertainty over global recovery, 2) new developments in globalization of manufacturing and services, 3) widespread perception & contention among economists against GDP numbers of countries such as India & China and 4) the limitations of existing methods of estimating GDP discovered over the years. 

The stakeholders pitching for GDP reforms include multilateral institutions, national statistical organizations (NSOs) and leading economists. 

Reliability of GDP, which is most important macro-economic indicator of national accounts systems, is vital for managing global uncertainty. It is also crucial for government of each country to take appropriate policy action such as changes in tariff on products or tax incentives to improve the economy’s working. 

Countries largely claim to be measuring their respective GDP in keeping with in keeping with System of National Accounts 2008 (2008 SNA), a global standard released by United Nations Statistical Commission (UNSC).

 (Edited Image Courtesy: artnet.unescap.org)

 

“Many important policy areas are not covered by Doing Business; even within the areas it covers its scope is narrow. Doing Business does not measure the full range of factors, policies and institutions that affect the quality of an economy’s business environment or its national competitiveness. It does not, for example, capture aspects of macroeconomic stability, development of the financial system, market size, the incidence of bribery and corruption or the quality of the labor force,” says Doing Business (DB) Report 2017.

This observation aptly applies to India. And this is far more important than the 130th rank that India has got among 190 economies on 11 parameters of business regulation assessed in DB 2017.

This annual flagship report of World Bank (WB) group gives an over-simplistic image of doing business in India. It can thus mislead prospective investors. It also does not help policy makers undertake holistic reforms that can make India a more credible business place. WB should revise certain parameters and add new ones to its DB methodology to make cross-country comparison more realistic and inclusive. 

Moreover, the domain of information on which DB report is based does not encompass a lot of valuable information. DB report banks on four main sources of information: the relevant laws and regulations; DB’s 39,000 respondents in 190 countries; the governments of the economies covered and the WB Group regional staff. 

DB report should factor in all information that does not flow through these four channels for varied reasons. 

India’s ranking, in all probability, would be much lower if DB methodology is widened by including vital parameters that bedevil business and economic growth in India and elsewhere. 

DB methodology is of bygone era. It is devoid of ground reality about business challenges/regulations faced by all stakeholders including Government organizations, public sector undertakings (PSUs), organized private enterprises and informal business sector. 

We can substantiate this contention by taking up specific cases.