How do I vote for a Government which admits it has no data? 

The Government claims it has no employment data. How can it then have authentic data on GDP? And if it doesn’t know what the GDP is, how does it do budgeting? And how does RBI plan for us?

People stand in a queue outside banks to deposit and exchange old denomination, at Barakhamba Road
People stand in a queue outside banks to deposit and exchange old denomination, at Barakhamba Road
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Arun Kumar

My main worry stems from the fact that this government has played around with institutions to paint a different picture of the economy. An economy which was doing reasonably well till 2016 was suddenly administered the shock of Demonetisation which decimated the unorganised sector. The unorganised sector accounts for almost 94% of the total employment and 45% of the total economic output.

As a result, demand of basic things such as agricultural commodities, textiles, shoes, etc. suffered and employment started steadily declining. The economy went into a tailspin. Then came the GST which has now been changed and amended hundreds of times.

It is not just that the economy was not able to recover from these two shocks that is important. The government, to cover its tracks, started saying there was no data available on employment. There is a fundamental fallacy there. If you do not have data on the unorganised sector, how do you have data on the GDP? How do you say the economy is growing at 7%? If you don’t have data on 45% of your output, your GDP data can’t be accurate.

You can’t assume that the unorganised sector and organised sector grew at the same rate. The cash shortage brought about by Demonetisation hammered the unorganised sector. The ratio can’t remain the same as that of pre-Demonetisation years.

The government’s position on 7% GDP growth rate is therefore untenable. For the lack of official data on unemployment, we have to rely on alternate data on the unorganised sector. The CMIE data shows huge number of jobs lost in the unorganised sector. If one takes that data into account, the unorganised sector’s contribution to the GDP post-Demonetisation was minus 4.5%. If you balance it out with the organised sector, the GDP growth comes down to 0%.


This government’s economic policy is built on wrong data. This is dangerous 

Taking into account the farm sector growth of 2%, the actual GDP growth comes down to less than 1% and not the 7% the government is claiming. The farm crisis and massive unemployment also do not support a 7% growth of the economy. The feel good factor is missing and businesses are complaining.

The government has been saying that IMF and World Bank are supporting the 7% growth rate claim. IMF and World Bank do not collect data on their own. They have no choice but to go ahead with the government data.

This government’s disastrous handling of the economy has led to an output loss amounting to ₹25 lakh crore over the last two and a half years. Investment in the economy is also not rising. It was 37% in 2012-13. Now it is around 30%. How can an economy grow at 7% if investment does not rise?


Now, let’s come to the biggest danger of playing around with data. If your data on employment is not correct, your GDP data can’t be correct. If your GDP data is not correct, your budgetary data can’t be correct. RBI which takes a lot of measures by following these data also is bound to falter in its monetary policy decisions. Thus, with one stroke, your entire policy making is based on unreliable and inaccurate data. The Mudra loan data has also been withheld. From 2016, NCRB is no longer recording data on farmers’ suicides.

This government’s economic policy is built on wrong data. This is dangerous. Such playing around with data affects India’s people. I am not going into the details of how other institutions of the country like universities and the CBI have been compromised. We have to look for an alternative. We have no choice.

(The writer is a leading economist and retired professor of Centre for Economic Studies and Planning, JNU, New Delhi)

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