There will be further delay in change of economic indicators

Posted on 2nd Jun 2020 by rohit kumar

The government's plan to conduct a consumer expenditure survey in 2020-21 has been derailed due to the recession caused by Coronavirus. This will further delay the exercise of change in the country's macroeconomic indicators, whose questions are being raised about the quality of the data.

Changing the base year of the Consumer Price Index and GDP from 2011-12 and 2012, respectively, depended on the results of the 2017-18 Consumer Expenditure Survey, which the government has recently decided to drop. Apart from this, field surveys are also facing challenges due to the epidemic and there is concern that the current year cannot be considered as a normal economic year.

 

As part of the change in the base year, a change of 5 years has been recommended to include structural changes in spending pattern. However, this should be a normal economic year. The government had earlier decided to change the base year 2011-12 to 2017-18. If the survey is done in 2021-22 or 2022-23, then the change in base year is likely to happen only in 2025-26 and it will change after more than 15 years.

 

Former Chief Statistician of India Pranab Sen, who currently heads the Quality Improvement Committee of Indian Statistics, told Business Standard that CPI and GDP are 'severely out of date' and need to be changed.

 

He said, 'GDP on the basis of 2011-12 is already very old. It should have changed around 2017-18, and that is why the consumer expenditure survey was done. He said that in 2020-21, when the survey is being completely rejected, the government will have to do so in 2021-22 and also to see whether it will be a normal year or not. Sen said, "There will be a negative growth rate in FY21. But even if you come out of it, the base year can be chosen only if the situation is normal. The base should include a stable economy. ' Sen has projected GDP growth to be -10.8 percent, of which the first three quarters will have negative growth rates.

 

The rating agency Crisil has projected the biggest slowdown in the country's history in 2020-21, when GDP will register a negative growth rate of 5 percent.

 

Prior to this, the base year of GDP was made from 2004-05 to 2011-12. The 2008 SNA Guidelines recommend a change in Aadhaar every five years. In the earlier case, the base year of GDP was to be raised from 2004-05 to 2009-10, but due to financial crisis and drought, it was an unusual year, the base year of 2011-12 was made.

 

PC Mohan, former chairman of the National Statistical Commission, said that all statistical activity has stabilized because it is almost impossible to collect data for the next few months due to the coronavirus epidemic. He said that the current year will not be a normal year.

 

He said, "There is a need to change CPI more than GDP because the ways of consumption of people have changed and it needs to be changed." On the other hand, there is not much to worry about GDP. This can be continued for some more time on the current base year as the data of the companies are being updated on the MCA21 database. '

 

The entire expenditure in the national account depends on the consumer expenditure survey. It is an indicator of trade, private investments, government expenditure and demand.