Covid-19 fallout: Outdated CPI, GDP may have to wait longer for revision

Revision of CPI and GDP base years from 2011-12 and 2012, respectively, was dependent on the outcomes of the consumer expenditure survey of 2017-18, which the govt junked sometime back

The second and the deadlier Covid-19 wave has derailed the government's plans to carry out the consumer expenditure survey in 2021-22 as well. This is further delaying the base revision exercise for the country's key macro-economic indicators, raising data quality concerns.
 
Revision of consumer price index (CPI) and gross domestic product (GDP) base years from 2011-12 and 2012, respectively, were dependent on the outcomes of the consumer expenditure survey of 2017-18, that the government decided to junk sometime back.
 
Economists have raised an alarm over the ‘severely outdated’ CPI and GDP data. Unlike data collection for CPI or IIP, surveys cannot be conducted over phone as they are detailed in nature. Besides the challenge of carrying out field surveys amid the pandemic, another concern is that the current year will not be a normal economic year, that is, for the second year in a row.

 

Former chief statistician Pronab Sen, who currently heads a committee to improve quality of Indian statistics, told Business Standard that CPI and GDP are ‘seriously outdated’ and need a revision. He added that as a result of subsidiary data not being available, increasing dependence on corporate data was distorting GDP. “We really do not know what the state of the economy is. Consumer price indices are completely out of line. Without the consumer expenditure, we can’t even revise it,” he said. Sen said that the macro data is capturing mostly the corporate data. “The problem with GDP is that we are largely getting data from corporates. Besides, as 40 per cent of the deflator in GDP is the CPI, the constant price estimate becomes worse,” said Sen.

 
Sen said for the survey to take place, there were a couple of pilots that need to be conducted as methodology has been revised. “The consumer basket is over a decade old and the weights would have changed significantly,” said Sen, adding that the revision should have been done sometime around 2017-18, and that’s why the consumer expenditure survey was taken up.
 
The entire expenditure side of national accounts depends on the consumer expenditure survey. The expenditure side comprises data indicators pertaining to trade, private investments, government spending and demand.
 
Whereas, the production side of national accounts is based on various enterprise surveys.

 
The NSS consumer expenditure survey (CES) measures the household consumption level and patterns related to living standards. The CES is used to provide the budget shares of different commodity groups for the rural and urban population, which are used to prepare the weighting diagram for official consumer price indices (CPIs). PC Mohanan, former chairman, National Statistical Commission, pointed out that macro aggregates are outdated and policies would have to be designed based on the old data sets or assumptions. “More than GDP, it is the CPI that will need a revision as consumption patterns of people change. But I don’t see any scope for a new survey. People are so unsettled now and will not welcome the surveyors. No new reports are coming from the department of statistics and CMIE (Centre for Monitoring Indian Economy) is the only one maintaining the new data for the last one year,” said Mohanan.