iip: India seeks IMF, World Bank help to deal with IIP, CPI data gaps

NEW DELHI: Faced with the challenge of data inadequacy caused by the Covid-19 pandemic and lockdown, India has approached multilateral agencies including the International Monetary Fund and World Bank to ascertain the practices elsewhere in the world to prepare economic indicators such as industrial production, retail inflation and economic growth. […]

NEW DELHI: Faced with the challenge of data inadequacy caused by the Covid-19 pandemic and lockdown, India has approached multilateral agencies including the International Monetary Fund and World Bank to ascertain the practices elsewhere in the world to prepare economic indicators such as industrial production, retail inflation and economic growth. Experts said deficiencies in data collection could affect the accuracy and reliability of the indicators.

Data inadequacy has become a global phenomenon in the wake of Covid-19 and the Ministry of Statistics and Programme Implementation (MoSPI) is collaborating with global institutions on data collection practices and to learn from the experiences of other countries facing the same issues.

“It is largely the World Bank we are in talks with who in turn are connecting us with other countries and organisations,” said one official.

Economists said the current situation was a threat to the accuracy and reliability of the indicators. They highlighted collecting data over April consumer price inflation (CPI) as one of the biggest immediate challenges for the National Statistical Office (NSO).

“For CPI data, it is definitely going to be very challenging. Almost 50% of CPI is from food items,” said NR Bhanumurthy, a professor at the National Institute of Public Finance and Policy.

The CPI is based on the prices collected from 1,114 markets in 310 towns and 1,181villages. The NSO is collecting data through telephonic surveys wherever shops are open and has also asked its officers and enumerators about prices so as to come out with data on essential products. However, experts said this could result in a smaller sample size.

“The CPI data for last month was much lower that what it actually was. It showed inflation had come down, but they mentioned that for 25% of items they were not able to get price quotations. The conservative thing to do is say there is no change,” CARE Ratings chief economist Madan Sabnavis said.

While releasing the retail inflation data for March, the NSO said it received about 66% of price quotations as data gathering was suspended from March 19 due to Covid-19, but added that this was within “acceptable limits”. Experts expect the March IIP data to be available at least till March 24 when the lockdown started, but the challenge will be the April data.

As per Sabnavis, the March IIP data might still be higher due to a base effect, while mining would be in the negative zone in April due to its dependence on labour that faced lot of constraints. For IIP, the NSO uses secondary data received from 14 source agencies in various ministries and covers 407 item groups.

“The source agencies are giving data but the effect of the lockdown will be visible in the data. The response rate has not been impacted much, especially in case of IIP,” said another official. Similarly, GDP data is compiled using regulatory filings of companies, among other sources.

“The issue is that if companies cannot bring out their P&L data by June, can the GDP numbers for March be computed. So, either you assume there is no change in numbers or work on the basis of a smaller sample which is more likely,” Sabnavis said.

USING PROXIES, GOING DIGITAL

On the issue of using proxies to release high frequency data, experts said the main challenge would be in assessing the extent of the impact in various sectors. They suggested various measures like extrapolation, interpolation, proxy data and providing ranges for estimates.

Source Article

Lois C. Ferrara

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