Saturday, October 07, 2017

Data and the economy

Three days ago, as the PM was delivering a speech on the economy, I tweeted this..
I stand by what I said. The RBI had only earlier that day revised the growth estimates for FY2018 to 6.7% (down from 7.3%) while the PM simply suggested that there was going to be 7.7% growth in the coming quarters which in my opinion was cherry picking of data and misleading.

Many complained on my timeline saying that I was wrong showing RBI data for the FY while the PM spoke of “coming quarters”, but they missed the larger point on the revision of FY18 numbers even as I insisted that the PM can’t cherry pick an upcoming quarter and that too, Q4. In my responses to some of the tweets, I erroneously mentioned that the coming quarters included Q1 and that Q4 was four quarters away, while I should have said Q2 (whose results are not yet out) and Q4 (results) is three quarters away. I promptly deleted that tweet when I realised the error. But my larger point holds.

The other point I made about the PM following bigoted people on Twitter is well documented by people such as in here.

As others - here, here and here have pointed out, the PM's speech presented a disingenuous argument about the state of the economy. After all, the last six quarters has shown a steady fall in growth numbers, which seems to have precipitated in the last three quarters in particular - a clear sign that the demonetisation decision has severely affected the economy, coupled with the problems that followed the hasty implementation of the GST.

There have been several articles in many outlets - including in The Hindu - that have pointed to the disingenuousness of the response of the government to findings about the quantum of demonetised cash returning to the bank and its implications, the state of the unorganised sector, the crashing of commodity prices due to disruptions in cash flow in the supply chains, the distress to farmers because of these price falls.. Then there are a number of stories about the problems faced by small traders and businessmen due to the GST's hasty implementation and trouble with the GSTN, unhappiness over excess bureaucratic work and so on. Some of this is of course teething troubles, but some of it is also due to the haste in which the implementation was done, which is reflected in the multiple changes suggested and made after its implementation.

The ill-effects of the slowdown of the economy is also reflected in the jobs market- where several reports, economists and even industry captains have suggested that there has been a deleterious effect. Other problems such as under-investment by the private sector and the low level of gross fiscal capital formation have persisted for many months now.

News outlets-including The Hindu - have carried out different views on how to handle this economic slowdown - some have spoken to the need for a fiscal stimulus to address primarily the infrastructure bottlenecks and ; some have suggested caution on the stimulus front and arguing for structural reforms instead; while others have said that the stimulus is still required despite structural weaknesses and disruptions in the supply side as this is the only way to address the lack of job growth.

In order to make an effective intervention, those in government must realise the reality that we are in (and which is a consequence of their own problematic decisions such as demonetisation). Those concerned about the economy must not buy into propaganda, which some in the government and among their supporters have indulged in, to paint a rosy picture when one does not exist.

Our job as journalists is to question the government and to keep it on its toes to mitigate the problems in the economy which are pretty much its own creation.

Personally, I have been part of a team in The Hindu that has come up with 100s of data points and graphics on various issues related to public policy, current affairs, political economy, sports, international issues, and so on.

We have as part of these graphics also pointed out to the mixed bag impact of demonetisation that looks at the aims of the exercise and whether they were at all reached, the declining gross fixed capital formation over the months, the slowdown in GDP growth over time, the gap between the changes in crude oil prices and retail petrol prices over time under the present regime (due to increases in excise duty) among various other charts. All of these are short data nuggets that add to the larger picture of what is to be done normatively by government and some of the steps recently taken such as the Rs 2 cut in excise duty address the issues pointed out.

As someone in the serious business of journalism, I will continue to pursue critical, objective and data driven journalism despite threats and accusations by right-wing trolls and wingnuts.