131 CAs debunk allegations of India’s ‘shambolic economic statistics’

One would imagine another set of economists debunking claims by 108 economists that state of Indian macro data is not in order.

But, the debunk has come from Chartered economists!

This has now been debunked by a team of 131 Chartered Accountants who have come down heavily on the said Economists and Social Scientists.

Here is their counter:

Disputing Government data is routine for experts around the world. However, it is unusual for a particular set to come together to discredit all data and long standing institutions of eminence.

The appeal seems even more devious as the data in respect of GDP, Poverty Alleviation, Ease of Doing Business are being duly published even by international agencies including World Bank, IMF and many others.

The international data and independent agencies have clearly confirmed the data being published by Government agencies. The appeal is also alleging suppression of data which is ‘inconvenient for the Govt’, while conveniently ignoring that the opposition and media are already playing their respective roles to the fullest in India.

Changing of GDP base year is a regular feature. Instead of taking issue with specific areas, a general bunch of allegations has been made, which leaves one guessing about the motivation of the signatories. The allegations appear choreographed, and resemble the previous “Award Wapsi” drama, which too was enacted just before a crucial state election.

A political tendency is being developed to disown institutions. Even facts reported by the Armed Forces are being questioned against national interest. Between 1960 to 2014 India had been left behind by all its peers from Japan, China, Taiwan, Korea, Brazil, Thailand, Indonesia, Malaysia, Singapore, Russia, South Africa and Sri Lanka in economic growth.

None of these economists or social scientists ever made an appeal in those 54 long years that India is on a slow track and is being left behind. Now when India has become the Fastest Growing Economy in the world they are worried about the credibility of data.

Is it their intention to scare Foreign Investors by creating doubts on the credibility of Data? Some Indian Banks indulged in massive evergreening of loans between 2008 to 2014. Equity Markets were correctly predicting massive under reporting of NPAs for years and majority of PSU banks were trading below book value for years. Yet none of these eminences made an appeal to give credible NPA data.

This raises doubts as to their true intentions, and one ponders whether this concern emanates from the upcoming elections. In their letter, while there has been no detailed proof for the allegations, a reference has been made about revision in GDP series post change in the base year to 2011-12 and the non-publication of NSSO labour force survey.

It may have skipped their mind but the base years of the National Accounts Statistics series have been changed in August 1967, January 1978, February 1988, February 1999 and February 2006. Such base year changes are made to ensure that data reflects the transition as well as the disruptions in an economy.

The rebasing exercise which led to the change in GDP growth rates – the base year was changed from 2004-05 to 2011-12, was set in motion by the UPA. The methodology for this was also approved by the UPA; that the numbers came out under NDA is just a coincidence.

The new GDP series introduced is compliant with the United Nations guidelines in System of National Accounts-2008 for the first time. It takes information for the corporate sector and has better estimates of the unorganised sector on unincorporated enterprises, as well as data on sales and service taxes.

Evidently a methodology in compliance with the United Nations Standard is shambolic as per the distinguished signatories. In a large country like India errors and omissions can happen while collecting and tabulating data.

It may be recalled that a few decades back while calculating inflation, the price of Iron ore was not revised for years, and later when the omission was corrected it resulted in a huge spike in inflation.

Data revisions are part of a healthy practice to balance between timeliness and accuracy. For example, all data sources have their bases changed at periodic intervals as well as a provisional and final data. For example the GDP data is normally revised five times before the final numbers are released. The five revisions happen as First Advance, Second Advance, Provisional, First Revised and Second Revised. Final GDP is revised after all these revisions, and this takes about three years.

Such revisions are not statistics in shambles but a reflection of robustness of the process within the limitation of size and scale of data collection.

    • The fast pace of roads built
    • Railway tracks laid
    • Rural homes built
    • Start ups hitting the skies
    • Huge number of jobs created in services
    • Deep and held back transformational reforms like GST unleashed, formalisation of the economy through demonetisation
    • Loopholes and leakage in money transfer to the poor being plugged through Jan Dhan Bank Accounts and Aadhaar
    • Tremendous increase in market capitalisation
    • Direct and indirect tax collection increase
    • Ease of doing business-rank jumping from 142 to 77
    • India’s FDI inflow overtaking China
    • Reduced interest rate on bank borrowings
    • Steep increase in tractor sales as a proxy indicator of agricultural development
    • Introduction of insolvency and bankruptcy code leading to settlements of more than Rs 3 lakh crore
    • ‘Big boy’ NPAs recognition and public auction of the same, a scandal free government etc

All of these have been conveniently ignored by our friends while writing their letter imputing motives

All this has helped India become the sixth largest economy in the world, the fastest ever jump, in the last 5 years. And if there is any doubt regarding this then the signatories are welcome to take this up with the World Bank – an international agency backing this claim.

Most independent professionals have no doubt about the remarkable progress India has achieved in last 5 years. We also believe that India is poised to move on a higher growth trajectory provided such politically motivated attempts to discredit India and dent its credibility and progress is appropriately countered.

We appeal to the professionals around the world to come together to present the true picture of India and counter baseless allegations with political motivations.

Rishi Mishra responds to this..

Interesting times!

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