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January 2019 Edition of Power Politics is updated.    Wishing You All a Happy New Year.       January 2019 Edition of Power Politics is updated.
Issue:January' 2018


Authentic narrative missing

G. Srinivasan

P. Chidambaram “Lies, damn lies and statistics” is what the advocate of the dismal science called economics used to decry when figures are used, abused and misused by the malleable authorities to suit their narrow ends of scoring political brownie points of their masters or to browbeat opponents into accepting their alternative truth! In these days of fake news when any authentic narrative is at a premium, people are not amused when they are constantly bombarded with fresh release of official figures to obfuscate the picture that the domestic economy did not grow well in the previous dispensation as was widely claimed or its own performance is a shade better with the incumbent taking charge of office since 2014 May.
One need not be judgmental that the back-to-back drought in the first two years of the NDA government, its demonetization of high denominational currencies in November 2016 and the rollout of the goods and services tax (GST) in July 2017 sans thorough preparations had all a disruptive impact on economic growth in most of the years of the incumbent government.

A synoptic summation of the raging row is that after averaging an annual GDP growth rate of 6.4 per cent year on year during 2012-14, growth in India increased to 7.3 per cent during 2015-17. In the first quarter of 2018-19 (April-June) its rise was a stupendous 8.2 per cent and it slowed down to 7.1 per cent in the next quarter July-September 2018. Given the macro-economic headwinds in the form of two droughts, demonetization and the adverse impact of an ineptly introduced GST, this glistening growth saga appear logically incongruent to ground reality, dispassionate analysts wryly say.

The timing of the new release, as it comes closer to the general election, indubitably renders its links with electoral politics compulsive, notwithstanding the contrary claims made-by the higher echelons in the political dispensation or administration.

Be that as it may, the release of the past national accounts statistics based on the latest base year through back-casting or reworking is a periodic exercise that governments resort to unfailingly in order to discredit the erstwhile dispensation or infuse confidence into the minds of the people that their management of the economy is a whit slicker than the previous ones! The data collated and computed by the Central Statistics Office (CSO) from 2005-06 to 2011-12, the new base year and released by the Niti Aayog became a bone of contention between the ruling party and the principal Opposition the Congress which ruled for a decade 2004-14 when it was ousted from power by a relatively unknown but resourceful State leader from Gujarat of the BJP.
In point of fact, the Modi Sarkar shifted the calculations to a new 2011-12 base in 2015 when it showed a salutary growth figures for the second term of the UPA too which was duly noted down by the former Finance Minister Palaniappan Chidambaram as justificatory of the sound economic and structural reform policies the Manmohan Singh government carried out.
Even when the euphoria generated over the 2015 revision died down, the authorities undertook another revision recently, contending that realignment of national accounts to the changing structure of the economy needs to be done regularly and there is also a need to “extend it backwards to provide a longer series”. To boot, it was stated that when this series was originally introduced in 2015, one of the results was that the growth rates for 2012-13 and 2013-14 were revised up very markedly.

Sanjeev Sanyal In the case of 2012-13, it was revised up significantly twice from 4.7 to 5.1 per cent and then further to 5.5 per cent. In an interview to print media the principal economic adviser to the Ministry of Finance Sanjeev Sanyal maintained that the new series increased the growth rates for certain years of the previous government and was hailed. If the same methodology now lowers the growth rates of earlier years because of back-casting or reworking, it is being frowned upon as fudge, argue some analysts.

TCA Anant Yet another former chief statistician TCA Anant said that ‘you can slice and dice the data anyway you want, but India’s GDP growth rate between 2004 and 2011 were bound to come down in the back casting computation effort”. He ascribed the uniform fall in GDP growth rates from 2004 to 2011 to the stastical effect and partly to a decline in the tertiary (services) sector gross value added (GVA) due to changes in the methodology.

The succinct point is that such a revision or re-working is bound to ruffle the feelings and leave the layman confused about the veracity of figures that keep constantly changing to suit the political winds.

Pronab Sen From the authorities’ side, the defense of data revision is founded on solid facts. The new back series data has been generated by a thoroughly professional body, the CSO and the tools and techniques it deployed have been duly scrutinized by experts with domain knowledge, including former chief statisticians and the Advisory Committee on National Accounts Statistics.
But as the former chief statistician Pronab Sen demurred to Niti Aayog being brought to the picture for the release of the data series, stating that the Niti Aayog is like the erstwhile Planning Commission is a political entity. He said that it is supposed to be an extension of the Prime Minister’s Office (PMO) and the moment Niti Aayog comes into the picture, it tends to provide a political color. Even PM Economic Advisory Council

Rajiv Kumar Member Surjit Bhalla had written that NITI Aayog presence was inappropriate.
The Niti Aayog Deputy Chairman Rajiv Kumar did not see anything wrong in its involvement in the data release function as there has always been very close links between the Department of Statistics and the Plan panel in the past as they used data extensively and worked in concert.
He said Niti Aayog provided the platform and subsequently the CSO requested it to take part in the release function too.

However, economists of repute have reasoned that the official back data on GDP runs the risk of denting the market’s trust and belief in official data released by the government bodies. The new data release impugns the earlier findings of a committee of the National Statistical Commission to develop methodology for deriving back data by linking the old series with the new base year of 2011-12.
Whenever the base for national accounts is updated to reflect changes in the macro economy, the old series is routinely linked to the new series for providing comparable data which can then be used by academia for fostering a viable and comparable time series.
But by releasing data that competes with an earlier study without providing a robust theoretical reasoning to buttress that change, both the CSO and the government think tank Niti Aayog might have attenuated markets’ faith in official data.

One thing is perspicuous that pertains to the timing of the new release, as it comes closer to the general election. This indubitably renders the links with electoral politics compulsive, albeit claims to the contrary by the higher echelons in the political dispensation or administration.