As the printing industry is well aware, our sister organization IppStar (IPP Services, Training, and Research Pvt Ltd), www.ippstar.org, has been researching the Indian publishing, print, and packaging verticals since 1999. Recently, IppStar made a presentation at the BMPA VisCon conference in Jaipur to contribute to a discussion of ‘scaling up’ growth.
Although our research and comments were based on detailed and integrated research of the publishing, printing, and packaging industries, there is a need to invest more seriously in granular research rather than relying on the Indian government’s mostly unreliable data. Forecasts by intermediaries are bad enough, but relying on government numbers could be fatal for investments in both organic and inorganic growth.
Highlighting this concern is the 14 July 2023 article by Vrishti Beniwal in Bloomberg Quint, subsequently reproduced in the Business Line daily, that points to the crisis in the quality of economic data that the country faces. Titled ‘Spotty Economic Data In India Jeopardizes A Fast-Growing Market’ and subtitled, ‘Behind India’s record-setting growth lies a glaring caveat: The world’s most populous country has a serious data problem,’ the article highlights both the obsolescence and poor quality of Indian economic data.
Many of the government’s surveys are based on decade-old data and categories of consumption that no longer exist. India’s former chief statistician, Pronab Sen, is quoted, “We have programs for people below the poverty line, but we don’t know the number of poor people.” Beniwal also quotes from a column written by Modi’s economic advisor Bibek Debroy and his colleague Aditya Sinha published in The Hindu that same week, “Our ability to track inflation effectively has been severely undermined. Our tools for understanding and managing our economic reality are grossly inadequate.”
As an example, Beniewal writes about the services sector. “The segment is now responsible for roughly half of a household’s spending, though it holds a 24% weight in India’s CPI, which hasn’t been updated since 2012. In another example, Indians spend less than 30% on food, though that metric comprises about half of the CPI basket.” She goes on to recount a comment made by Chief Statistician GP Samant in June. “What we cannot measure we cannot manage,” he said, while promising to “create an ecosystem where data guides policymakers on the path of sustainable development.”
The government started a new consumer expenditure survey in 2022, after years of delays. Meant to capture consumption patterns and help in policy formulation, it won’t, however, feed into GDP or CPI metrics for at least two years, forcing analysts to use alternative indicators like air traffic and fuel demand to check the pulse of India’s economy.
Researchers are not only vexed by outdated numbers – frequent revisions to existing base data add frustration and complexity, making it difficult to predict the details of where one of the world’s fastest-growing economies is headed. Data revisions made India’s growth appear impressive despite the devastating ban on high denomination notes. Another revision following the economic contraction of the pandemic lockdown tried to make the country’s recovery look rosier than it is.
Beniwal goes on to quote, Kunal Kundu, a Societe Generale GSC economist, “Forecasting growth in India is a ‘hazardous task,’ partly because the numbers are so elastic. Gross domestic product for last quarter surprised many when it came in one percentage point higher than estimates. The reason everybody got this wrong is the alarming regularity with which the data is getting revised.”
Officials themselves avoid the government’s own figures. For instance, rather than use ‘bad data,’ economists at the Reserve Bank of India are likely using a combination of intuition and inflation numbers to set interest rates, according to Sen. RBI Governor Shaktikanta Das said in June, “Monetary policymakers supplement official estimates with information on auxiliary variables to have a firmer assessment and minimize policy errors emanating from data revision.”
The consumer expenditure survey, as well as the new nationwide census, haven’t been updated since 2011. With the number of field investigators stagnant since the 1970s, poorly trained contractors are responsible for collecting the bulk of demographic information despite population growth of hundreds of millions.
“The infusion of politics into data collection has frustrated many of India’s official statisticians, who’ve emphasized that the nation can’t reach its growth goals if nobody knows what’s happening on the ground,” said PC Mohanan, the former head of India’s National Statistical Commission, who resigned in 2019 to protest the government’s decision to withhold a jobs report. He added, “There is a credibility crisis. In the absence of real and credible data, people will go for all kinds of interpretations and that is a problem. Who knows what the right picture is, because there is no survey.”