It is generally recognized that in a market-oriented economy such as ours, a well conceived, timely and reliable official statistical system is crucial for presenting a realistic picture of the economy. A dependable statistical system provides a correct diagnosis of underlying conditions which could be used as key input for policy formulation. Besides, the dispersal of authentic data would also help those in industry, services, economists, students, NGOs etc to dovetail their strategies to the emerging realities. It is in this context that the availability of reliable and accurate statistics becomes more a necessity than an option.

Our country has been fortunate in having a highly credible statistical system put in place right after our independence. This makes India rank among the very few developing countries which regularly makes available both macro and micro data to the public with assured transparency.

However, despite this, the quality of official statistics, which constitute the building blocks of the statistical system, has deteriorated over the years. The decline has happened substantially in the post-liberalisation period, especially as the dismantling of the licensing regime made statistics collection voluntary. Today the methodology, conceptualization, timeliness, sample design and computation of data are out of sync with reality. This is as true of agriculture, manufacturing, corporate and non-banking financial sector as of computation of inflation, capital formation etc. The policy decisions taken on the basis of faulty statistics have the potential to be inherently flawed.

Let us take the example of data on agriculture production. Here the weakening of the land revenue system has made it difficult to estimate land use, which is central to any estimate of agriculture production. Not surprisingly, data has become unreliable thereby creating an important gap in our statistical system.

The data on industrial production (IIP) is also unrealistic. The base year for IIP, till date, continues to be 1993-94 despite the sweeping structural changes that have taken place in the Indian economy in the subsequent period. No wonder, items like typewriters and sewing machines continue to remain in the index despite their diminished importance while items of relevance such as mobile sets, laptops, CDs etc are not represented. It is essential that the items selected for IIP are in conformity with their importance in the national economy.

Similar is the situation with data pertaining to the wholesale price index (WPI), used to measure inflation in the country. In this case, too, the base year continues to be 1993-94, price quotations may not be adequate and the items have weightages which do not necessarily reflect the market realities. It is also reported that the index for as many as 167 items have not been revised for periods ranging between 8-60 months.

Besides, services are not included in the calculation of both IIP and WPI. This is despite the fact that the sector constitutes around 54% of GDP. Similarly, items such as transportation, electricity, rent and medical expenditure, which form an important part of the consumption basket, go unrepresented. Moreover, the indices capture data from only large firms while the coverage of small scale, unorganized/unregistered and exporting sectors are inadequate and poor.

Another serious problem is the large gaps between advanced and final estimates computed by the government. For example, there has been an upward revision of real GDP figures by 1 per cent and more in the last few years. Recent figures show that according to advance estimates, real GDP grew at 8.1 % in 2005-06 which was up-scaled to 9.4 per cent in the final estimate. Furthermore, the downward revision of real GDP growth from the advanced estimates of 6% for 2000-01 to the final estimate of 4% , a full 2% below the original, casts doubts on its credibility. Similar is the case with recent upward revisions in WPI figures.

There are also methodological problems such as incremental infusion of capital not being counted as FDI, construction being counted as services as per CSO and as industry according to RBI, inadequacy of data at the state level, among others.

To overcome these deficiencies, it is important that new and innovative methods are devised to ensure accurate and latest data collection and to quicken the delivery system both at the centre and state level by effective coordination between government agencies, strengthening the capabilities of existing staff and by provision of necessary infrastructural facilities. There is need for independent third party audit which questions the validity of data produced by the Government. Finally, public- private partnership in data collection and dissemination, which supplements and not supplants the government data collection machinery, is of utmost necessity.