The data maze: It undermines economic policymaking. An overhaul of the statistical system is urgent

Over the last week, there were two separate instances when GOI representatives wished India generated more reliable agricultural data. First, finance minister Nirmala Sitharaman made a pitch for a real-time assessment of likely yields of crops and observed that sometimes there are last-minute scrambles to import vegetable oil or pulses to compensate for inadequate domestic production. Separately, the Union food secretary said there was a mismatch between GOI and trade estimates of wheat output. GOI’s estimate of 112.7 million tonnes in 2022-23 is about 10 million tonnes more than the market’s.

Issues with farm output data have real world consequences. GOI’s estimates for both rice and wheat output in 2022-23 show an increase in production. Yet barriers have been imposed on their exports to cool rising domestic prices, which are not in sync with production data. Export bans have negative consequences for farmers. They also undermine the country’s reputation as a reliable supplier. Separately, it makes RBI’s job of adjusting interest rates to keep inflation within the mandated range harder. A delayed response to changing rates because of poor data leads to sharp adjustments and ripples out to other sectors of the economy.

Hopefully, farm output estimates will improve with better technology. For instance, in the ongoing kharif season, GOI has launched a pilot digital crop survey in 12 states, to enhance the reliability of data on acreage. Some of Isro’s advances with satellites promise to deliver results soon.

To be sure, quality issues now span almost the spectrum of economically relevant data. The delay in carrying out the census has affected multiple other data sets that rely on it to build samples. This delay also harms GOI’s existing schemes. For example, Census 2011 showed that 30.3% of India’s 118.7 million cultivators are women. Guidelines of some GOI schemes for agriculture require implementing agencies to spend at least 30% of budget allocations on women farmers. How relevant are these percentages today? A transition from traditional to digital models of doing business has been a consequential change over the last decade. But India’s GDP base year is over a decade old. Unless the statistical system gets the requisite attention, policymaking will remain hamstrung. The drift needs to end.

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