Q1 GDP Data Doesn’t Capture Full Extent of Damage to Indian Economy, Ex-chief Statistician Says

Former Chief Statistician of India, Pronab Sen, said that the Q1 GDP data does not fully convey the extent of the damage that the lockdown inflicted on the economy. In an interview with moneycontrol.com, Sen said that the data sample contains data from only the larger companies that were impacted due to the lockdown and not the unlisted, smaller firms.

“The Ministry of Corporate Affairs data would come which would have all registered companies, including the unlisted. That’s where I suspect the damage would really come out because that data would include the smaller companies that I think have been worse affected than the larger ones that are currently included in the sample. And then after that comes the informal sector,” Pronab Sen, was quoted as saying.

On Monday, the National Statistical Office (NSO) said GDP contraction in the April-June period of FY21 was the largest slump on record since India started reporting quarterly data in 1996. The fall in output compares to 3.1 per cent growth in the previous quarter, which was the worst performance in at least eight years. This is the sharpest contraction since the nation started publishing quarterly figures in 1996, and is worse than any of the G20 nations.

Commenting on the extent to which the Q1 GDP data reflected the damage to the Indian economy, Sen said that this is only the first step as the QI data reflects the effect of the lockdown and doesn’t really provide an indication of what the dynamics would be going forward.

“That will come later. The lockdown effects will persist a little longer because we have these localised lockdowns happening. So the data is going to be in a sense affected by that. But when you have damage of this magnitude because of the lockdown, it takes time for it to play out through the economy. Those effects would be starting now and go on possibly for a year, year-and-a-half. So this is only an indication of the initial shock that the economy has faced,” Sen added.

Sen said that besides agriculture, there is no data in the informal sector. He, however, added that that’s only a part of the story.

“First, the first quarterly estimate is largely based on corporate data. Even in that, it is limited to listed companies, those which have to submit quarterly reports to the Securities Exchange Board of India (SEBI). Second, as far as the companies are concerned, because of the lockdown, SEBI had extended the time within which the returns have to be filed. So, a lot of the companies have filed the returns yet,” Sen told moneycontrol.com.

He added that when those would come in, the numbers would have to be updated again as then there would be the availability of data of all listed companies as opposed to the partial data available at present.

“…Like I said, this is only listed companies. Then the Ministry of Corporate Affairs data would come which would have all registered companies, including the unlisted. That’s where I suspect the damage would really come out because that data would include the smaller companies that I think have been worse affected than the larger ones that are currently included in the sample. And after that comes the informal sector,” he said.