Data Not reliable.

Post economic downturn, every one of us might have heard representatives from ruling government coming over the mike and expressing there view regarding the inflation and GDP growth. Expressions of these estimates were very frequent and were not governed by a single spokesperson slowly it become a routine in our life to come across through varied figures of growth and inflations through various sources. Whoever found a forum to address took an opportunity to share his estimates of inflation and GDP.

Ground reality as a citizen I encountered is totally different and opposite to what government claims. I never felt that inflation has cooled off; rather I felt that it is rising with each passing day making survival more difficult. But representatives are claiming that it has cooled off and further cooling will be seen in coming months. GDP can’t be felt on an individual level but the figures disclosed by government are discounted on the bourses, so have less faith on those numbers.

Raising doubt on these numbers might have proved to be a sin if an individual would have dared to, as one’s capability, competency and status would have proved insufficient to question government machinery. But finally someone dared;

A statement from RBI came as a big question to these figures, in its stance RBI said that they cannot make policy decisions relying on the data provided by the government as they are facing severe headwinds on multiple fronts because of the erroneous data published by the government-from advance estimates of GDP to revisions in industrial production (IIP) numbers to the preference of WPI over CPI as the measure for inflation.

Further RBI stated that if the data released by the government is inaccurate then the policy drafted by the central bank may turn out to be suboptimal, though the figures are seen with suspicion, but in the absence of any other alternative, they have to work with unreliable numbers.

In February 2010, the advance estimate for GDP growth for 2009-10 was pegged at 6.8%. Three months later, this was revised to 7.7% while in February 2011, the quick estimates pegged it at 9.1%-a change of over 40% within a year. This sort of projections fails to give analysts and policy makers the true state of the economy apart from hampering policy decisions.

Now as RBI has raised this issue probably the decision makers will address this with little bit of seriousness.

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