November 30, 2018 @ 11:45 am

30 NOVEMBER 2018

Number theory 

The larger lessons from the GDP back series must not be clouded by a political slugfest

Backcasting, or reworking past national accounts statistics based on the latest base year, is a regular exercise that governments carry out. Mainly done to enable precise comparison and analysis, it is a difficult exercise prone to contestation as it involves the inclusion of newer data sources, exclusion of outdated ones and making some subjective assumptions in the process. Throw in the political element, and GDP backcasting can become a controversial exercise, as it has now become in the case of the release of back series data from 2005-06 to 2011-12, the new base year. The data computed by the Central Statistics Office (CSO) and released by the Niti Aayog show that India never really grew in double-digits in 2010-11, nor was it the high-growth economy in the five years preceding this as earlier thought to be. It so happens that this period covers the two terms of the Congress-led United Progressive Alliance government, and the new data have predictably set off a political storm. The Congress may feel aggrieved as its biggest achievement, of taking India on the high GDP growth path, has come under question. During earlier instances of backcasting of GDP data, the political environment was not as deeply polarised as it is now, and so the exercise remained more academic.

The danger in the political slugfest now is that the many valuable insights that can be gleaned from the data will be lost sight of. The biggest of these is that India never really decoupled from the global economy during the years of the financial crisis (2008-10), unlike what was earlier believed. The new back series data show a much lower growth rate. This is an important learning for policymakers, going forward. Any criticism of the data has to take into account the fact that it has been generated by a thoroughly professional organisation, the CSO, and the methods have been scrutinised by experts, including past chief statisticians, and the Advisory Committee on National Accounts Statistics. Certainly, the release of the back series by the Niti Aayog goes against convention and is bad in optics. But this should not be reason to contest its integrity. The method of computation reflects the latest United Nations System of National Accounts; it also captures changes in the economy since 2004-05. Data sources have also been updated. Experts had testified to the robustness of the method when it was introduced in 2015, even while underlining that the availability of reliable data was crucial to arrive at the correct overall picture. There is little doubt that India needs to invest more in data collection and integration and do informal sector surveys more frequently. Robust, updated data are, in fact, insurance against politicians hijacking what is essentially an economic exercise.

Cool it

Increased exposure to heatwaves needs a policy response, nationally and globally

The staggering loss of an estimated 153 billion hours of labour during 2017 due to rising temperatures around the globe is a reminder to governments that they are not doing enough to dramatically curb greenhouse gas emissions. The Lancet countdown on health and climate has reported that India was particularly affected by the rising frequency of heatwave events and lost about 75 billion hours of work, a significant part of it in the agricultural sector. This has worrying implications for rural employment and the well-being of a large section of the population that depends on farming. At stake for all countries in the developing world is the health of millions, many of them already vulnerable to extreme weather events. Coming on the eve of the UN climate conference in Katowice, Poland, the report of the Lancet panel for 2018 brings clarity, placing connected issues in perspective for governmental action. It is vital that India gets more ambitious about cutting back on carbon emissions, even as it presses for the fulfilment of the climate finance obligations of developed countries under the Paris Agreement of the UN Framework Convention on Climate Change. A further reduction in the share of coal in the energy mix through sustained support for renewable energy, particularly solar photovoltaics, must form the cornerstone of national policy. This must be matched by a shift away from use of fossil fuels for transport, and the induction of more electric vehicles. Such a policy would yield the parallel benefit of improving air quality; ambient air pollution led to the premature death of an estimated half a million people in India in 2015.

The consensus on climate change is that it has begun to affect the intensity and frequency of extreme weather events. India’s approach to adaptation should, therefore, prepare for catastrophes with a well-considered plan to provide relief and rehabilitation. If the Centre and State governments can arrive at a consensus on the strong climate link to the excessive rain in Kerala and Cyclone Gaja in Tamil Nadu, for instance, a case could be made for climate funds under the Paris Agreement. Such a claim has to be supported by a perspective plan that identifies vulnerable regions and communities, and incorporates transparent systems for funds utilisation. The importance of funds for adaptation is underscored by Lancet’s finding that 99% of losses from climate-related events in low-income countries were not insured. From a public health perspective, the report sounds a warning that rising temperatures will enable the dengue virus and malaria to spread farther and faster. This is also true of some other infections. The aggravated impact of climate change on health is a serious issue for policymakers to consider when they gather in Katowice for the conference on December 2.

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