‘We don’t have Enough Data to Predict Rainfall Distribution’
Better information flow will be the key to tackling inflation, says Chief Statistician of India TCA Anant while outlining measures such as identifying shortages in advance and strategic planning on imports for the incoming government. In an interview with ET’s Dilasha Seth, Anant, who is also the secretary of ministry of statistics and programme implementation, says the ministry will push for data collection and information at a disaggregated level to facilitate policy-making. Edited excerpts: Do you feel the economy will go through a transition after the new government takes over? What are the core challenges that the incoming government will face? The economy faces certain challenges right now. Inflation rate has been high though it has eased a little compared to six-seven months ago, but it is not at a level where you might say that you are comfortable with it. GDP growth rate has come down to what may well be the lowest in a decade plus. Investments have not shown signs of increasing. So these are clearly dimensions of the problems. What measures should the new government take to deal with the near perennial problem of inflation? Fundamentally, inflation arises because of a demand-supply gap. Any policy to tackle inflation will need to address this concern. There are two issues involved, short-run steps and long-run steps. In the short run, you need to identify critical areas of shortage and seek to address them through better information flow. This essentially means that if the shortage is local and there is better availability somewhere else, you use better information and management to distribute the availability better. The second way could be to identify shortage in advance and do some strategic planning like imports. Information clearly plays an important role to identify which shortage is taking place and where. What is your assessment of inflation for the year given the upside risks due to the El Nino scare, which could lead to deficient rainfall? True. That (El Nino) fear is there. But exactly how it is translated needs to be anticipated. We have reasonable stocks of foodgrain. It needs to be seen what impact it will have on commodities like oilseeds and pulses, for which we do not have adequate stocks, and also on vegetables. The problem is that it is very difficult to do in advance. What people fear is that overall rainfall will be less than the long-term average. This doesn’t help us enough as you need to know where it will be short and what impact it
will have. So, will it depend broadly on the rainfall distribution? Yes, the country’s different zones and areas provide different commodities. The impact on prices will depend on where the shortfalls occur, if they occur. The impact of rainfall shortage in western India will not be the same as that on eastern India. The distribution matters as it determines what type of commodities will get impacted. Similarly, different areas have different levels of protection against rainfall shortage, so the ground impact of rainfall shortage is different. We do not have adequate information to say what the rainfall distribution will be like. Private estimates are putting GDP growth for 2013-14 lower than the government’s advance estimate of 4.9%. What do you have to say on that? What growth target can the BJPled government look at to begin with? You will need to wait till the end of the month for the GDP growth for 2013-14. And, what should be targeted, I cannot answer. Whether 6% or 7% are modelling decisions and not relevant in terms of what the current growth levels
are asking you to do in terms of policy. To improve growth, there are two major issues that need to be addressed. First, improve sentiment in order to increase investment. Second, if existing investment is not being productively utilised, take steps to improve productivity to increase output. These are complimentary to each other. Some factors hindering productivity are in relation to coordination failures or disjoint communication between sectors. You have a situation where electricity production depends on coal production. Mospi’s basic requirement and what we would like to achieve is very simple. Effective policymaking requires a lot of information. This information is now needed not only at all-India level but also at the disaggregated level to strengthen information systems across the board. Tackling inflation in the short to medium term is about identifying shortages and taking steps to augment them. It requires information systems to tell you about both demand and possible supply. So far our systems have been geared principally around aggregate pictures at the all-India level. We get a considerable amount of data at that level, but not of the same level and timeliness at the disaggregated level. We would like to get data at a more disaggregated level and in all areas, which requires more policy work. Do you specific areas in mind? We need more data in agriculture, services, employment, basically specific elements. Mospi’s role is complementary to all policy agenda which includes developing and monitoring the policy and its impact. A high-level committee headed by Saumitra Chaudhuri has submitted recommendations regarding IIP revision. By when can we expect the new series with the base year 201112 to be released? I am not sure about the timeline. The National Statistical Commission will discuss the report and may wish to make suggestions. Based on what NSC finally advises us, we will then construct the index based on the recommendations of the committee and its feasibility. We will need to assess if the feasibility breaks down on account of lack of data availability or the lack of timely data availability. They have recommended a base year of 2011-12 from 2004-05. GDP revision is expected to conclude by this year.
Without going into numbers then, what will be the key to drive economic growth? What will be the agenda of the ministry of statistics (Mospi) that you would like to raise with the new government?