A newly elected government affords India an opportunity to re-examine and update a fundamental building block for its fast-developing economy: its data and statistical system. A transparent, robust and credible data system is important for any country because it provides critical inputs to policymakers, investors, political parties, researchers and the media to conduct and critically evaluate progress.
The more dependable and credible the system is, the greater the efficacy of policy and trust in potential outcomes. It is a foundational precept that any country aspiring to become developed must reduce macroeconomic volatility over time.
Here are five ideas for consideration:
Declare ‘Glasnost’ for public data: Take a radical step towards making India’s statistical system open, transparent and modern. Most statistical systems in developed countries are transparent but suffer from legacy problems of measuring ‘industrial’ indicators in an information age. India has a golden opportunity to leapfrog to a truly modern data system meant for the evolving economy of tomorrow.
This will not merely match developed countries, but allow us to get ahead of them on many dimensions. The most effective way to do this would be to ask the National Statistical Commission, staffed with the right talent, to reimagine the data system.
This commission would not only use traditional insights gained from surveying firms and households, but also modern technology and statistical tools to tap the multiplicity of data feeds that are now available, such as from the goods and services tax (GST) system.
Innovations in using the data trail of the GST system, for instance, could pioneer a revolution in how emerging markets deal with the ‘unorganized sector’ by tapping indirect tax data rather than more formal estimates of production/output.
Immediately announce and conduct the ‘2021’ population Census: With both covid and the national elections behind us, the time is right to announce and conduct the Census that was due in 2021. Data collection for the country’s national head-count is a massive but extremely important effort that sets the base information for a host of policy measures.
Among other things, the government needs to update its information on lagging geographical zones, vulnerable sections of society and fragile sectors, so that it is able to aim assistance at the needy while minimizing leakage.
An updated census will also bring to the mainstream a discussion on a fair re-allocation of political representation (based on population), technically called ‘delimitation,’ and a fair re-allotment of economic resources among states. The balance that needs to be struck between representation and the sharing of economic resources will need significant investment in time and effort to build a national consensus.
Jobs are the top job: In both developed and developing countries, employment and wages are unquestionably the top priority. India’s labour force is an extremely complex one, ranging from sophisticated and globally competitive engineers, business leaders, scientists and doctors to a large middle-class workforce right down to subsistence farmers and low-skill self-employed workers.
This complexity will require a wide range of solutions. Creative alternatives will only be possible when useful data related to this complex question becomes widely available. We need a complete re-imagination of how to collect longer-term and high-frequency data related to employment and wages for the formal, contractual and informal sectors.
For instance, we need innovative approaches to the use of tech tools for high-frequency data and proxy data to estimate real-time shifts in wages, apart from creative methods to estimate changes in the total labour force and proper estimation of the part-time workforce contribution of female workers.
Eliminate gaps and bugs in the GDP series: India launched a new data series for gross domestic product (GDP) in 2015. This series uses the MCA21 database of firms and was converted into a real series by using a newly-estimated GDP deflator. Technical issues in the estimation of GDP and its deflator and the resulting inconsistencies with high-frequency data have been widely discussed in the media.
A Glasnost approach that makes the entire data series and model sets publicly available would take the wind out of the sails of critics and allow for a thorough vetting of the data and its measurement approach.
The role of states: There is nothing in the Indian Constitution that prevents states from collecting and publishing their own data. While states can request data from the Centre through both governmental and Right to Information (RTI) means, they can design data systems in their own territories.
Very few states do this, and even fewer do it consistently. By providing an important cross-check on state-level production, inflation, labour trends and other indicators, states can serve an important role in further upgrading the quality of national data.
For statistics to be imbued with meaning, the underlying data must be as accurate, open, unbiased and widely available as possible. The use of data for narrative interpretation is not only ‘not wrong,’ it is integral to a democratic society. But pre-cooked data that serves an opaque ‘khichdi’ (hodge-podge) of a narrative does not serve any actor in the ecosystem well in the long-term.
P.S: “Storytelling has a narcotic power,” said British novelist Robert Harris