Mission for NITI Aayog

NITI Aayog should make India a first-world nation in economic data, statistics, analysis and dissemination

Sajjid Chinoy of JP Morgan (India) wrote in The Indian Express that the Reserve Bank of India (RBI), under D. Subbarao, was blindsided twice by inadequate and lack of timely data. The RBI began a gradual tightening cycle in 2010-11 but subsequent revisions showed that economic growth had begun to accelerate much faster than what initial estimates had suggested. Again, in Q1 2012, the rate of inflation was revised higher retrospectively. Had it been available on time, the RBI may not have cut interest rates by 50 basis points in April 2012.

Andy Mukherjee wrote a column on the day before the RBI met to decide on monetary policy in September 2015. He wanted to make a case for the RBI to make a sizeable interest rate cut. So, he had to cite some information on the extent of economic malaise. Usually, most commentators would look for weakness in job creation (employment) as a justification for aggressive interest rate cuts. The problem is that there is not much useful employment-unemployment data in India. He had to be content with citing the well-publicized news of highly educated youths applying for the job of a peon in government service in Uttar Pradesh and statistics on the number of youths attending colleges having doubled to 60 million from around 30 million in 2005.

Arguably, the most widely followed data release in the world is that of the monthly non-farm employment in the United States. Both private sector economists and academics find enough in it to write tomes. What kind of labour market data does India have?

The labour bureau of the ministry of labour and employment is located comfortably in Shimla—away from all the action in the country. It published the Indian Labour Year Book 2011 and 2012 together on 16 March 2015! The data on employment and unemployment is available only up to March 2011 and that too only for the organized sector, which employed about 29 million people out of an estimated total workforce of around 480 million. The population estimate then was 1.211 billion. The participation rate is too low. The very fact that organized-sector employment is about 6% of the total workforce is an indication of India’s inefficient production structure. Too many people are not in the labour force and about half of those in it declare themselves self-employed. Therefore, the unemployment rate in the country, unbelievably, was 3.8% based on the second employment-unemployment (E-U) survey that commenced in July 2011 and was completed in July 2012.

By January 2015, the labour bureau had issued a press note on the fourth annual E-U survey, while the survey report itself was released in October 2014. The survey was conducted between January and July 2014. The Yearbook 2011-12 released in March 2015 did not bother to include that number, even in the footnotes. The fourth E-U survey has five volumes. The unemployment rate as per the fourth E-U survey had gone up to 4.9% and that too because of the high unemployment rate among people aged 15-17 years and 18-29 years. The unemployment rates in these two categories were 17.5% and 12.9%, respectively. Incredibly, for people aged 30 and above, the unemployment rate was 1.4%!

In addition to this, the labour bureau conducts quarterly employment surveys. For some strange reason, they are labelled, Quarterly Report on Effect of Economic Slowdown on Employment in India. The 24th report was released in April 2015 and it pertained to the period October–December 2014. According to this 24th quarterly survey, the economy had created 421,000 jobs in 2014. Since there is no corresponding data on the growth in population—or the growth in the labour force— it is hard to make out if the economy was creating jobs in adequate numbers. In January this year, it was announced that the ministry of statistics and programme implementation (MOSPI) would conduct quarterly employment surveys to provide information in a more timely fashion. We have not heard much about it since then.

Keeping all this in mind, I have a new mission in mind for NITI Aayog. It should declare that its goal is to make India a first-world nation in economic data, statistics, analysis and dissemination in the next four years. It can set aside every other project it is working on. MOSPI can focus on programme implementation and the statistics wing can be folded into NITI Aayog. If NITI Aayog pursued this mission, it would discover gaps, redundancies, inter-ministerial and centre-states’ coordination and overlapping issues. It can document all of those and publish a separate report on the governance issues it discovered in the process. If it succeeds in doing so, the transformational impact will be considerable. Faith in government institutions would be restored too. It would enhance India’s credibility in the world. More importantly, policy will be made with timely data and facts rather than based on ideology and polemics.

On winning the 2015 Nobel Prize for economics, Angus Deaton said that democracies required good data. Nothing more needs to be said.