Little or no data about India’s vast informal and micro industries is creating a blind spot for policy makers and in increasingly becoming an area of concern, says the Bibek Debroy, the head of Prime Ministers economic advisory council.
“One concern for me is that we do not have a very good handle on data on jobs and employment. The concern is not just in jobs and employment, but it is a much broader concern. We must be in a position to improve our data collection system, including the time lags, and we must be in a position to have data that are non-conventional, ” says Debroy , a NITI Aayog member and Chairman of Prime Minister’s Economic Advisory Council (EAC) , in a conversation with ETRise.
In January next year a partnership between the Small Industries Development Bank of India and CrisilBSE -0.39 % will come up with a quarterly report that will track capacity utilization, order books and margins at micro, small and medium-sized enterprises, says Bloomberg. The report is expected to cover more than 1,000 MSMEs that are available in the databases of Sidbi and Crisil. However, the country has over 50 million SMEs and an undocumented number of micro enterprises that exists outside any formal system. For Debroy and every policy maker, this is a huge concern as there is little data to fall back on. In the absence of credible information, policy decisions often amount to shooting in the dark.
Currently the quarterly employment survey (QES) of the Labour Bureau is often panned for being insufficient, because the time gap between surveys is too long and more importantly it covers only the workers in eight core sectors of the economy and does not take into account the non-farm segment. On the other hand The Bureau of Labor Statistics of the US Department of Labor does a much better job by bringing out monthly jobs report that represents a much wider section of the economy.
Debroy, who is tasked with looking at “issues of macroeconomic importance”, however, feels the worse is behind us when it comes to the economy. “Not realising what drove that low figure of 5.7% was not so much the slowing down. Yes, the slowing down had continued, it had been going on several quarters now, but the fact that I have a nominal rate of growth, I have to deflate with the GDP deflator. The GDP deflator that particular quarter had gone up, which made that 5.7% seem worse than it was. Timelines matter and if one is talking about the next few quarters, I would say that growth would be about 6.5% or there-about, gradually inching up. There is every sign and anecdotal evidence that we have seen the worst,” says Debroy.
There are also concerns about the impact of GST on the rate of growth and Debroy adds that the impact of GST is very difficult to quantify because it is not binary in nature.
“The effects of GST will continue for some time, but GST does have some positive also. It brings efficiency and it also brings something that was not a part of GDP earlier – the informal and black economy, into the legitimate part. The effect of GST on GDP will undoubtedly be positive, but you would ask, ‘what about the disruption’. I would say that, notwithstanding whatever disruption there is, 6.5% should be something that we get,” says Debroy.