MACRO ECONOMIC DATA - MERELY "ESTIMATES?"

about 3 months ago
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Tomorrow, it would be very interesting to see the data on IIP for March and CPI or Retail Inflation numbers for April coming in.  WPI or the Wholsesale Inflation data is scheduled for 14th May.

Especially CPI and WPI because  they are for April, the month when the entire country was shut down, with only essentials and medical shops open. CPI is a primary source of data – it is collected directly from shops and establishments. Price data are collected from selected 1114 urban markets and selected 1181 villages by the Field Operations Division of NSO, MoSPI in a uniform weekly roster. And when there is a shutdown, movement is itself suspended, naturally, getting this data is a challenge.

On 13th April, the Govt released the CPI for March and despite the shutdown being for only 11 days in that month, the Ministry of Statistics and Programme Implementation (Mospi) said that field work for price collection of CPI was suspended with effect from 19th March, 2020 and about 66% of price quotations were received. For assessing the price behavior of remaining price quotations, National Statistical Office (NSO) state that it follows well established and internationally accepted methodology and practices and used those extrapolatory and interpolatory methods to fill in the missing price data on estimates of General CPI at national and state level and CPI for Sub-Groups, Groups at All India level. But with now data completely missing for April, will the entire data be an estimate only? And if its just an estimate based on various statistical “models” what is really the accuracy of this data?

What about the IIP? This is for the month of March and we will have data till the 20th of the month. IIP is a secondary source of data - primary production data for IIP are collected by various administrative ministries/ departments/ organisations. Production data on majority of IIP items are collected by the Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry from individual manufacturing establishments as per rules under the Industries (Development and Regulation) Act, 1951. Similarly, mineral production data are collected by the Indian Bureau of Mines (IBM). Other legal instruments in use are The Electricity Act, 2003 for Electricity data, Vegetable Oil Product Production and Availability (Regulation) order, 2011 for production of Edible Oils, Vegetable Oils and Fats, Tea (Marketing And Control) Order 2003 for tea production data, Salt Cess Act 1953 for salt production data, Essential Commodities Act 1955 for sugar production data.

Currently, data is being collected from phone-to-phone surveys wherever digital data collection falls short. And the accuracy depends on responses that are collected; these will likely be estimates made on the basis of a response rate of 20-30%. Mospi said that it is also collaborating with World Bank for understanding data collection practices and to learn from the experiences of other countries facing the same issues.

GDP for Q4FY20 is scheduled for 29th May and this is compiled using regulatory filings of companies. But with their filing date itself being extended to 30th June, what will the data for GDP based on then? Maybe the NSO will have to release the data based on a smaller sample size?

The conservative thing to do is say that there is no change, but only for CPI and WPI. For IIP, we cannot use this status quo yardstick and neither for GDP.

Thus the macro economic data that we will get in the coming days needs to be taken as merely “indicative.”  Accuracy of these data will be a big question mark. Thankfully, neither is the RBI looking at this data for policy decisions nor is the Govt. So we look at the data for the next two months as just an exercise and only once the economy starts can we really rely on any of these data. And as such, for now, the only data which really matters and which will decide all the policy making is the data from the ICMR on the daily Covid numbers.

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