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When the Central Statistical Office released the press note on
Estimates of Gross Domestic Product for the first quarter
April-June last week, it instantly evoked strong disapproval of
several macro numbers by data users. Prodded into explaining the
wide divergence between constant price-evaluated growth numbers
in GDP at factor cost (8.8 per cent) and at market prices (3.7 per cent),
government officials were groping for answers that could pacify
inquisitors. And then, in an almost unprecedented development, CSO
came out with a corrected press note on the numbers, attributing the
faux pas to errors in data entries and, more worryingly, inappropriate
use of price deflators in GDP at market prices. Researchers were
aghast at the howler committed by India's apex statistical body.
The corrected price deflator that brought down current price data by 13+ per cent, against 20+ per cent under the wrong deflator, yielded
a growth rate of 10 per cent in GDP at market prices. By the way, price
deflator for GDP at factor cost was assessed at around 12 per cent.
The WPI and CPI—the two explicit price indices—were running at 11
per cent and 13-14 per cent, respectively. The corrected data also
showed on expenditure side of GDP, among others, private final consumption
expenditure go up by 3.8 per cent (0.3 per cent), government
final consumption expenditure by 14.2 per cent (-0.6 per cent),
and gross fixed capital investment by 7.6 per cent (3.7 per cent) during
Q1. Economic growth in terms of the macro numbers is covered
separately in the current issue.
The sharp disagreement between the growth rates in GDP at factor cost
(8.8 per cent) and GDP at market prices (3.7 per cent) should have alerted
CSO experts, commanding years of experience in national account
statistics, that there was something terribly wrong in two aggregates that
differ in indirect taxes (net of subsidies).
CSO has been releasing quarterly macro numbers for nearly a
decade, and has reduced the time gap for release from three months
from end of the quarter to two months. It has also started giving
expenditure side of the GDP since 2008; the data though are broadly
guesstimates, according to reports. While appreciating CSO for such
initiatives, we are saddened by the serious errors. CSO officials, who
include top ranking statisticians, should have checked and rechecked
the macro numbers before they were released, and failure to ensure
this reflects poorly on their professional approach and commitment to
what they produce. CSO has also been secretive about the deflators,
termed implicit deflators (against explicit WPI and CPI), which it uses
for converting current price GDP data into constant price data. The
incident also calls for better transparency in "implicit" deflators used
for national income aggregates.
Pitfalls in macro indicators impair the entire economic and statistical
system in the country. Moreover, with India's performance keenly
watched at the global level in view of its superior growth rates, such
faux pas by CSO could lower the reliability of macro data. So, the country's
apex statistical institution should gear up to ensure that such
mistakes don't happen again.
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