Saturday, July 27, 2019

Numbers maybe wrong, people are not.

Economist SS Bhalla scornfully dismissed data collected by the National Sample Survey Office (NSSO). Bhalla was a part-time member of the Economic Advisory Council to the Prime Minister and appears to be an ardent supporter of Prime Minister Narendra Modi. The government has decided to merge the NSSO with the Central Statistics Office (CSO) and create a National Statistical Organisation (NSO). Comparing employment surveys in 2011-12 and 2017-18  show "a log growth in average per capita consumption of 24% between the two years. Consumer prices rose by an average of 36% between the two years. Real growth in consumption -- a minus 12% over six years." "A real consumption decline of anything even close to this magnitude has not been observed at any time in Indian history (or even in pre-historic times).." Strong stuff. The methods of calculating unemployment between these two years are completely different and the higher figures could be wrong, wrote Prof N Kaushal. While ridiculing unemployment figures, Bhalla strongly defends the new method for calculating GDP growth after the base year was changed to 2011-12 from the earlier 2004-05, which increased the growth rate during the current BJP government's tenure, while reducing the rate during the earlier Congress-led government. Bhalla is enraged by a paper by the previous Chief Economic Adviser Arvind Sunramanian (AS) suggesting that the growth rate of GDP was overestimated by 2.5%. "You can search far and wide, in journals and in newspapers, but no one, absolutely no one, has made such a calculation and assertion as AS has done for any non hyper-inflation economy for such a long period of time," Bhalla fulminated. Based on electricity consumption Prof Thomas Rawski found that "growth in China averaged just 3% over the four years 1998-2001 compared to the official estimates of 8%+." Apparently Rawski's estimates were "soon discarded by experts". Strange, an eminent economist like Bhalla has not heard of the Li Keqiang index, who happens to be the current Premier of the State Council of China. Since Bhalla is so unhappy about statistics in India, perhaps it maybe time to construct a Li Keqiang index for India, as suggested by TN Ninan. Which is exactly what Arvind Subramanian has done. The Reserve Bank (RBI) has pointed to a fall in India's consumer confidence and a decline in Private Final Consumption Expenditure. Consumption of articles of daily use (FMCG) has fallen. Sales of passenger vehicles crashed by 20.6% in May. As a result, nearly 1 million jobs have been lost in companies producing parts for automobiles. Perhaps, Bhalla should stop nitpicking about statistics and talk to people who have lost their jobs. Real people. Rather than numbers.

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