India needs more data transparency

Few used to question the reliability of the country's GDP growth numbers. That's beginning to change.

- Mihir Sharma

India's institutional strength used to be reflected in the reliability of its national accounts. Unlike in China, few questioned the government's figures for growth in gross domestic product (GDP), and investors rarely needed to supplement official numbers with other data sources.

That has, quietly, changed. While few believe Indian statisticians are actively working to make growth numbers look better than they are, less and less data is publicly available, methods are less transparent, and the GDP figures in particular sometimes diverge puzzlingly from independent data.

The minister in charge of statistics recently told Parliament that the government planned to ask a new committee to recommend how it should update its national accounts. Official statisticians should seize this opportunity to overhaul how India's GDP is calculated in order to win back trust.

The government's justification for the update is that India's data is still based on prices dating back to the financial year that ended in March 2012. Such "rebasing" is a chance for wholesale reform particularly because the last time the GDP series was revised was exactly when questions first began to be asked about its reliability.