PUTTING DATA QUALITY ON A MORE CREDIBLE BASE

INDIA received a Grade C—for the second consecutive year—on the quality of its national accounts and government finance data.

- DIPAK MONDAL @New Delhi

Grade C indicates that the data shared with the International Monetary Fund (IMF) “have some shortcomings that somewhat hamper surveillance”. In effect, persistent weaknesses in key statistical areas make it difficult for the IMF, economists, investors and policymakers to obtain a fully accurate and timely picture of the Indian economy.

The IMF's assessment broadly echoes concerns long flagged by economists and analysts in India.

The primary issues relate to national accounts data — especially GDP and gross national income — stemming from an outdated base year and shortcomings in the deflation methodology. India continues to use 2011-12 as the base year for calculating real GDP. Experts argue that for a rapidly evolving economy like India’s, a decade-old base year fails to reflect structural shifts. The IMF and others have noted that relying on outdated relative prices and sectoral weights can misstate growth, particularly by under-capturing emerging sectors such as digital services.

Responding to these concerns, Chief Economic Adviser V Anantha Nageswaran told this newspaper recently that the issues flagged by the IMF — including base-year revision and the use of a single deflator —are well recognised and are being actively addressed by the Ministry of Statistics and Programme Implementation (MoSPI), with improvements planned by 2026. He added that these methodological limitations could just as easily understate GDP as overstate it.