Questionable economic data can hamper policies

The government is responsible for addressing concerns on the numbers

Last week, 108 economists and social scientists issued a joint statement which marks a watershed moment in India’s economic history. The letter is written under the fear that debates on the Indian economy might lose their gravitas in the future. The signatories allege that this has happened because the present government has displayed a “tendency to suppress uncomfortable data” and, in the process, undermined “access and integrity to public statistics… [and] institutional independence and integrity to the statistical organisations”. The signatories include academics of different ideological persuasions.

The primary concerns cited in the statement – the debate around the credibility of India’s GDP statistics and the government’s refusal to release the results of the latest National Sample Survey Office survey on employment – have not developed overnight. The onus of addressing these concerns lies squarely with the government. The credibility crisis of India’s statistical system will inflict both short-term and long-term damage. Ironical as it may sound, the government itself will become the biggest loser in the process. Unless the government has access to objective and robust data, its policy interventions are bound to be ill-informed. If the government is indeed suppressing uncomfortable truths, as the statement alleges, it is subverting its sacred commitment of facilitating citizens to hold governments accountable in a democracy.

Erosion in credibility of India’s statistical system will make investors sceptical of official claims about the economy. International capital seeks different return for going to different countries. Factors which determine this are not just economic but also political and institutional. If the credibility of data is under question, the premium on this might increase. The powers that be might believe that assertions to the contrary will take care of the problem. This is not going to happen. The Indian State must act urgently to address the crisis of credibility which has engulfed our economic statistics.