Random Numbers

Graphic Errors

• IIP reported at 5.9% in Nov '11, revised by December 2011 to 1.8%. Error in capital goods output, which was pegged at 25.5%(actually it was -25.5%)
• Q-1 GDP growth on demand side tripled to 10% from the 3.7% announced earlier
• Commerce ministry overstated export estimates by $9 billion in December 2011
• IIP for January 2012 pegged at 6.8%, corrected to 1.1% last week after over-estimation of sugar output.

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Understandably, the ministry of statistics, which oversees the CSO, works according to a pre-arranged schedule to keep the numbers secret. The letter-bearer waits at the PMO for the CSO’s website to be updated, he receives a phone call with a green signal and finally, he gives the letter to the prime minister. The painstaking secrecy only reflects the importance of the numbers. “No one should be able to be in a position to take undue advantage (of the data),” explains Pronab Sen, former secretary of statistics and now a member of the Planning Commission.

That explains why finance minister Pranab Mukherjee was so jittery last week when T.C.A. Anant, secretary in the ministry of statistics, admitted something went horribly wrong in February. The ministry revised January’s index from the very encouraging 6.8 per cent to a measly 1.1 per cent. (Manufacturing is 40 per cent of the Indian economy and 15 per cent of its jobs). The revised IIP data was a key factor for the Reserve Bank of India (RBI) to cut the policy rate by 50 basis points—the first time in three years. It did so, RBI governor D. Subbarao says, with an eye to slipping growth.

Of course, if the RBI had known this data from the start, would it have acted earlier? No one can really answer that—markets never look back, only at today and tomorrow. “This time, industry seems to have got what it wants,” says Sen, referring to the rate cut. The problem is, the government’s latest explanation—the mix-up was because the directorate of sugar reported four months’ data instead of one month’s—doesn’t inspire much confidence.

A committee of 35 members, headed by Saumitra Chaudhuri, of the Planning Commission and the PM’s economic advisory council, will now revise the “base year” and, probably, also the “basket” of goods that go into the index. “I can change weights easily. To change the sample companies is more difficult. Let’s see which way the committee decides to go,” says T.C.A. Anant, who is also India’s chief statistician. All this is good, but the ministry would have done it anyway. It was only waiting for the economic crisis to subside, to ensure correct long-term readings. Altering the basket is sensible, but that didn’t cause the latest problem either.

The blame, instead, lies in the ministry’s air-tight schedule to release data, the rigour missing in reporting spikes, their inability—or laziness—in cross-checking numbers during holidays. “The error this time was a one-off case. In retrospect, we’re taking the technical steps needed to ensure against it,” says Anant. He says a combination of hurry, and lack of attention seems to have caused the mishap.

Whatever the reason, it’s coming to the point where any number put out by state agencies is met with suspicion, whether the rate of growth, where the poverty line should be, or what a banana costs and who can really afford to eat one. That said, many failed to hear voices of reason, which were insisting that the January numbers were a “blip”, not “green shoots”. The voice now says the economic crisis is coming again. If that happens, it won’t be the CSO we’ll be calling for a confession.