Rajan raises concerns over quality of GDP data

Raising concerns over missing data while calculating GDP, Reserve Bank of India Governor Raghuram Rajan said there is need to improve the quality, quantity and timeliness of GDP data.

“We need to improve the quality, quantity and scope of our data. We are working on it. We certainly need timely information on employment… We need to get comprehensive data perhaps at a monthly level… In many other countries, the employment data forms the basis for a number of decisions on the monetary policy,” Rajan spoke at the 8th Statistics Day Conference in Mumbai.

The RBI chief said the data related to GDP misses out a few small sectors, adding that our data on employment comes from various sources with different lags and are not necessarily comparable and timely.

He said the RBI will formally approach the National Sample Survey Organisation (NSSO) on this.

Further, he said some aspects of business like the small business activity and unorganised sector data are captured relatively late by the GDP data.

Highlighting that construction is central to growth, Rajan said it was important to get data on construction sector and also quickly capture and get comprehensive data on consumption. Lastly, he also called for more coverage of data on a variety of non-bank institutions and extent of hedging by corporates.

Reiterating his stand on inflation, the Governor said, “The real problem is inflation that is persistent. We have been emphasising again and again in order to break the back of inflation, we got to break this persistence.”

He said the RBI is also working on coming up with a producer price index soon.

“We still don’t have a proper producer price index. It is extremely important to understand the differences between retail and wholesale prices. Those are things to worry about. We are trying to get this data and hope to receive it relatively soon,” Rajan said.

Accepting noted economist Surjit Bhalla’s view that monetary policy is not having an impact on inflation, Rajan said in the last few years, food inflation has been the most significant aspect of inflation and that there may be a link between MSP and inflation.

He said once inflation is contained, the RBI will be in a much more comfortable position.