NSO struggles to gather accurate inflation, industrial data during lockdown

The National Statistics Office (NSO) is facing a distinct challenge during the coronavirus-triggered lockdown:  How to gather accurate data to compute retail inflation and industrial production, which are among the key metrics for the economy? 

Closed shops and markets, field officers working from home, and factory personnel unavailable to provide data are the hurdles the statistics department is battling during this unusual time. With data collection officers working remotely, price data is being collected on phone rather than through physical visits for the consumer price index (CPI), raising accuracy concerns. The other challenge relates to the closure of some markets which will need to be replaced with the ones that are still open.

Monthly price data is collected from 1,114 markets across 310  towns by the field operations division of the statistics ministry and the specified State/UT Directorates of Economics and Statistics as well as from 1,181 villages by the Department of Posts.

“We are devising alternate strategies for collecting and compiling data” said Pravin Srivastava, chief statistician of India.

While we should be okay for March as markets were open through large part of the month, April data may be challenging. Items will not be available in the market as only essentials are being sold. In that category too, many markets and shops are closed, for which we will have to replace the markets. We are analyzing the data coming from the field right now as reporting is being done on phone,” said Srivastava.

 

 

This, however, raises data accuracy concerns, pointed out former chief statistician of India Pronab Sen. “In retail inflation, data comparability is the key. If the category is basmati rice, you need to gather price for only a specific quality of basmati rice. That will be a challenge to do on the phone. The point is we don’t know if the data being reported is accurate,” said Sen.

Coming to the index of industrial production, the data for March, which will be released in May, will be problematic with most factories closing down in the middle of the month. Unlike CPI, production data for IIP is submitted online by  factories in a specific format by the production team and reaches NSO through 16 source agencies including the Department of Policy of Industry and Internal Trade (DPIIT), Directorate of Sugar, etc.

However, even if a factory carried out production during some part of March but closed after that, data may not get reported due to shortage of factory staff. Sen pointed out that providing data to the government is not high on the list of factories and follow ups have to do done. “In case of no response, the data entered will go as zero, which will not be true on the ground,” he said.

To tackle this, the NSO will reach out to corporate groups to provide data to the source ministries in a timely manner. “We will request the DPIIT to interact with the reporting units and get whatever data they can,” said Srivastava. The data for the lockdown period, beginning March, will carry a caveat that it is not comparable with the previous years.

For example, barber shops are closed, so there will be no data for the month of April. “And then if you say zero versus last year, it would not actually be compatible,” said Srivastava. He added that there are challenges and the department will use statistical methods for computation and see how much is doable.

In fact, the department is also in touch with international agencies to gather experiences of handling data and statistics amid the pandemic situation.

“There are going to be data gaps throughout the world. The problem is not unique to India. This is a global problem and we are in touch with all the international agencies to see how we can address it,” the chief statistician of India said. From now on, online and telephone would perhaps be a predominant way of collecting data, he added.