‘We don’t have Enough Data to Pre­dict Rain­fall Dis­tri­bu­tion’

The Economic Times - - Economy -

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?

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