How the lockdown could be creating an economic data vacuum in India

It has impeded the govt's ability to collect numerical information, forcing it not to release key inflation figures

The government released truncated data for the month of April, due to lack of available numbers and limited wholesale transactions amid a nationwide lockdown.

The government didn’t release the inflation figures for manufactured products, which have a combined weight of 65 per cent in the index, something that many believe made the numbers unclear as the bulk of the index wasn’t there.

For manufactured products in the previous month, prices in the sector had risen by just 0.3 per cent, after rising by 0.4 per cent in February.

Days before that, the Ministry of Statistics and Programme Implementation (MOSPI) released the consumer price index-based inflation (CPI) data only for certain sub-groups, but did not give the general CPI number, citing difficulties in collecting the data due to the Covid-19 pandemic. However, it did revise the CPI inflation for March to 5.84 per cent from 5.91 per cent.

It said that for April, price data was largely collected by telephonic inquiry from the designated outlets.

The groups and sub-groups for which no data was released include meat and fish, pan, tobacco and intoxicants, clothing and footwear, fuel and light, household goods and services, transportation, communication, and miscellaneous items.

The two data sets, along with other difficulties in collecting and collating data during the Covid-19 lockdown, have given rise to fears that the country might be staring at some sort of data vaccum. And that is something that can harm policy making in these crucial times.

In case of CPI, the ministry had said that for April, the price data was largely collected by telephonic enquiry from the designated outlets. This was was supplemented by information collected during the personal purchases made by field staff of items being transacted from neighborhood outlets, keeping in view the travel advisories. Critics, however, said this raises a big question on the reliability of the numbers.

Alternative arrangement 

A dew weeks back, the National Statistics Office said it was examining options such as the use of mobile applications for reporting price data to compute retail inflation, but the system has raised a question mark on the effectiveness of the data collected, in the absence of proper back up.

The government said that through an application-based system, shopkeepers will be able to update price information in a format every month, partly doing away with the need for visits by field investigators.

The objective is to ensure sustained data quality and collection amid a lockdown or a pandemic-type of situation in the future as well.

With closed shops and markets, field officers worked remotely and collected information via phone in April for the consumer price index, raising concerns about data accuracy.

A report published in Business Standard quoted Chief Statistician Pravin Srivastava as saying that the government is exploring alternative methods of data collection such as telephone or mobile applications which would be institutionalized in due course of time. (Click here to read the report) 

Despite a telephone- or app-based system, one may need to follow up with the shopkeepers to upload correct data.

Monthly price data is collected from 1,114 markets in 310 select towns by the field operations division of the statistics ministry and the specified state/union territories’ directorates of economics and statistics.

Apart from this, the department of posts collects data from 1,181 select villages.

As for challenges related to the telephonic method, Srivastava said it was possible that a shopkeeper might not respond during the peak time and hence correct information might not be available.

Judicious use of GST data for calculation 

Pronab Sen, former chief statistician of India said that more than WPI, it is the accuracy of the CPI data which is questionable.

He said in the case of WPI, the data is collected directly, which is why there isn’t much problem as it largely ex-factory price.

But, in the case of CPI, Sen says that one has to go and collect information from the field, which has been impacted badly due to the Covid-19 lockdown.

“This will definitely impact economic decision making unless some way out is found out of this,” Sen said.

He added that a lot of the data which could not be collected will have to be judgement-based because in the absence of hard numbers, you will get some information later, which then has be updated based on one’s assessment.

“In this period of time we will have to be more judgement-driven than data driven until data collection starts again then one can interpolate,” Sen said.

He said GST data will become very critical in the coming days, as it can give a fair idea of how many units have been shut, how many have temporarily suspended production, how many are running, and how much they have produced.

Sen has a piece of advice for the government. He wants it to analyse and study GST data properly to come at a more realistic picture of the Indian economy, as traditional sources of collection may not present a true picture.

He said the problem will persist as most company offices have remained shut during the lockdown, and one doesn’t know how badly their operations have been impacted.

“To me, the government should employ top data analytics personnel to study the entire GST collection data of this period to arrive at any realistic assessment that lockdown is having on businesses and their working,” Sen said.