An audit to check 'unreliable' economic data

With Indian statistics facing heavy criticism from all quarters in recent times, the Central Statistical Organisation (CSO), which is responsible for coordination of statistical activities in the country and evolving and maintaining statistical standards, will have to explore ways to reduce dependence on outsourced secondary data collection.

The CSO, which is a part of the Ministry of Statistics and Programme Implementation (Mospi), released two important data series of the Index of Industrial Production (IIP) and National Accounts comprising the Gross Domestic Product (GDP) of the country.

Both the data series have faced heavy criticism in the recent past. However, the National Accounts is still considered one of the best data series in our statistical cannon.

However, various components within the IIP series have been dubbed as being "volatile" and "unreliable" by experts, industry analysts and even the Reserve Bank of India (RBI).

In response to the heavy criticism, the National Statistical Commission (NSC) has ordered an audit of the process used in the construction of economic data, starting with the IIP.

"The audit will look at the reasons why the data is so volatile. It will document and examine the methodology and will also explore ways in which the ministry can reduce dependence on different sources and have a standardised data collection process", said a Mospi official requesting anonymity.

The audit will look into every state and central agency involved in data collection for IIP.

It will go into the various sources from which data are collected to identify gaps and areas of inefficiency. The ministry intends to initiate corrective measures to fill the gaps that the report identifies.

The audit will be undertaken by the Mospi under the direction of a five-member National Statistical Commission, headed by R Radhakrishna.

The IIP data is currently compiled by Mospi after receiving data from different departments of various ministries and state agencies.

Mospi is not directly involved with the primary data collection, though it is responsible for maintaining the quality of the data.

For that purpose, Mospi along with its regional offices conducts periodic sample surveys used to maintain the quality of the data received on a monthly basis. Such a sample, in the case of the IIP, is the Annual Survey of Industries.

Given that the data coming to CSO has been collected by various agencies, more often than not the statistical standards are not uniform and the technological encryptions also vary making collation and matching samples for data series very difficult.

This has resulted in many within the ministry and other independent statisticians to root for standardisation of data collection and reducing multiplicity of data-collecting agencies.

However, for the ministry, reducing reliance on other agencies will require extensive capacity building and human resource development.

Mospi has consistently suffered from human resource constraint as trained statistics personnel do not find it lucrative to work for government statistical agencies.

But ministry officials state that standardisation of data processes is an "eventuality" if the statistical scenario in the country has to keep up with the rising demands for relevant statistics in a rapidly growing economy.

"It will need a lot of work but a lot of it has already begun. We have started to work at the grass root level, at the level in schools and colleges to make the syllabus more relevant and suited for the job. We are focused on generating human resource", said another source in the ministry.