Former RBI governor and Chicago economist Raghuram Rajan, while in India to promote his new book The Third Pillar, spoke to two television channels. Earlier, Union finance minister Arun Jaitley had rubbished the concern raised by 108 economists about the reliability of data. MyNation spoke to economist Surjit S Bhalla where he said, while he was yet to complete his research on growth and job data, as of now the indicators from his study are positive.
New Delhi: Former RBI governor Raghuram Rajan on Tuesday expressed doubts over Indian economy growing at 7% when not enough jobs were being created and said the current cloud over the GDP numbers must be cleared by appointing an impartial body to look at the data.
However, Finance Minister Arun Jaitley has been stoutly defending the growth data saying an economy cannot be growing at 7-8% without creating jobs. He has also stated that no major social agitation indicates it hasn’t been jobless growth.
Economist Surjit S Bhalla, who has been doing a thorough research on the subject — including a comparison with the data of the UPA 1 years — told MyNation it is too early to reach a conclusion. He is looking at the investment rates across the UPA and NDA years.
When asked about the data on jobs, Bhalla said, “We have got to get the government to release the relevant data.”
“I am very confident of the analysis I have done on the basis of the report,” Bhalla said.
Rajan himself admitted, while speaking to a television news channel, he had no idea what statistics are pointing at currently and “a revamp” was needed “to really figure out what India’s true growth rate is”.
“I know one minister (in the Narendra Modi government) has said (that) how can we be growing at 7% and not have jobs. Well, one possibility is that we are not growing at 7%,” he told the channel. He did not name the minister.
Bhalla says there was certainly a “mess-up” in the job data. “They selected people during the sampling after the first stage where everybody is listed. The second stage was done on the basis of education. The first rule of economics is that you never stratify, never select on the basis of an endogenous variable,” he said. While saying education does affect labour force, he said the data so arrived at may be fuzzy.
But “EPFO data is very reliable. While you don’t know whether a person had a previous job or not, for the youth that is less than 21, you can be certain they did not have a job previously,” Bhalla said.
He said the mention of previous jobs, if any, should now be made part of the system. “That will be a significant step forward,” he said, adding, however, “We are not there yet.”
Rajan, a former Reserve Bank of India (RBI) governor who is back in the profession of teaching economics, said a stronger broad-based growth is needed that creates more jobs.
On doubts being raised by some over economic data after revision in growth rate, he said a clean-up act is needed and an impartial body appointed to look at the numbers.
“I just think that we need now to essentially clean up, find out what in fact is the source of confusion with the new GDP numbers, with the revisions etc. I would say setting up an impartial body to look at it is an important step to resorting confidence,” he said.
The impartial body may throwback the same numbers but “we absolutely need better confidence in our GDP numbers now given the back and forth we have had”.
In November 2018, the Central Statistics Office (CSO) lowered the GDP growth for previous Congress-led UPA by recalibrating national accounts. After this, the four years of the current government showed higher average growth than that achieved during the UPA.
Last month, the government revised the economic growth rate upwards to 7.2% for 2017-18 from 6.7% estimated earlier.
Questions have been raised about the government not making public the NSSO labour survey that reportedly put unemployment rate in 2017 at a 45-year high.
Earlier this month, a group of 108 economists and social scientists said that lately, the Indian statistics and the institutions associated with it have however come under a cloud for being influenced and indeed even controlled by political considerations. However, in no time, more than 130 chartered accountants challenged their claim, and the challenge went viral on Twitter.
“… any statistics that cast an iota of doubt on the achievement of the government seem to get revised or suppressed on the basis of some questionable methodology,” the group had said in a statement. On the other hand, the National Statistical Organisation, which directed the CSO to change the base year from 2004-05 to 2011-12, is an apolitical and autonomous body that the Narendra Modi government could not have dictated terms to.
The new method is internationally accepted as changing the base year every five years is a universal standard practice.
The new method takes into account corporate information from the MCA21 database of the Ministry of Corporate Affairs rather than from the RBI study of company finances.
Jaitley had countered the 108 economists, saying 70% of them were compulsive contrarians, a term he had coined to junk opponents of Prime Minster Narendra Modi-led government earlier.
Rajan is in India to promote his new book, The Third Pillar. He said a broad-based growth that creates meaningful jobs for people was needed.
“We need stronger broad-based growth, which primarily for most people means good jobs. What we need to do is focus on how do we create good jobs for the vast number of people who are leaving schools, who are leaving agriculture, who are leaving universities, in such a way that they can expand India’s growth,” he said.
“Lot of people have said the population dividend should not become a population curse. This is the time when we need to make sure that in fact doesn’t happen,” he added.
Speaking to another news channel, Rajan suggested that the government should now look back at demonetisation and ask whether it worked. “And what were the positives and negatives... Self-examination is something that every government must do for better governance and efficiency,” the economist said.
On the question of lack of jobs, Rajan said India has had a good record with credible data, but on this issue more clarity was needed.
“We need to take a fairly clean, independent look at our statistics process. What I would think might be useful is to get a panel of independent experts to go through that... and think very carefully about the processes we follow,” he said.
“Given that kind of anxiety, it is important, just to convey to the world, that we are not manipulating anything... this is our data, to actually have an independent group look into it and certify that our data indeed is fine or suggest the changes needed,” he said.
With inputs from PTI
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