Clipped from: https://www.thehindubusinessline.com/opinion/editorial/lost-sheen/article69096034.ece
Revision of gold imports data does not inspire confidence
The late Dr Manmohan Singh once told a British economist-cum-journalist that while a big mistake by the journalist didn’t cost anyone anything, even a small one by him could cost millions of people a lot. This message does not seem to have percolated down to government departments. So it’s no surprise that last fortnight the government did what all governments do from time to time: goofed massively. It first said gold imports had gone up hugely in November (331 per cent) as had electronics imports (17.4 per cent). Then it realised that the increase was so massive that it finally did what it should have done before releasing the data: check it. So it released a correction. Sorry, it said, we were migrating from one system to another and that is why the error occurred. The actual imports, it is now saying, were much less.
We were off by $5 billion in November ($9.8 billion instead of $14.8 billion), and by $11.7 billion ($37.4 billion instead of $49.1 billion) for the April-November period. That correction brought down the merchandise trade deficit for November by 13 per cent (to $33 billion) and the eight month deficit too by 13 per cent to $71 billion. And all this time, it must be presumed that policy was being made on the basis of the higher deficit. This has happened before. In 2011, too, the gold import data was overstated. Questions have been raised over the accuracy of GDP data in recent years, which do not help investor sentiment at all. At other times, the value of securities held by Indian households has been underestimated. Such errors, with policy and business implications, go unpunished. In this case, it is not yet known whether the ‘double counting’ error is restricted to gold and electronics, or holds for other imports to Special Economic Zones. On the subject of gold imports, it is worth noting that November imports of the metal are up 188 per cent even after the correction.
The short point is that our governments have from time to time displayed a casual attitude towards data and best practices. They don’t seem to realise the importance of the credibility of national data, nor the way in which governments must inspire trust by not making egregious mistakes. Many will say it’s important to distinguish between mere administrative errors and genuine errors of compilation and computation of data. But the larger issue is the increasing proneness to making mistakes. The paucity of competence in government appears to have reached alarming proportions now mainly because of the prevalent political criteria for recruitment and a long standing scant regard for training. It’s one of those things that no one likes to talk about because often political correctness prevents it.
The Modi government has tried various ways to solve it. But it’s all been at the top, whereas the problem mostly lies at the lower levels of government where much of the actual work is done. This is a political problem that is going to need a lot of resolve to solve.
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