If FinMin wants advance data in Jan, we will give it: T C A Anant

Interview with Chief statistician, CSO

As the finance ministry prepares itself to advance the date of the Budget presentation in Parliament, Chief Statistician T C A Anant says the Central Statistics Office will meet the statistical requirement by releasing earlier advance estimates of gross domestic product (GDP) data than the current practice of doing so in February. He tells Dilasha Seth and Indivjal Dhasmana that the revised calendar for advance estimates would be released. Excerpts:

Will you be releasing advance estimates of GDP in January to enable the finance ministry to present an early Budget in Parliament?
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We will make a formal announcement on the calendar we prepare. There will be a formal letter the finance ministry will write to the CSO, intimating it about the Cabinet decision (of advancing the Budget date). If the finance ministry wants it in January, we will give it.

Will early estimates compromise on the quality of data available for Budget prep, given you will not have the revised estimates of the previous financial year, as these are released on the last working day in January?

The magnitude of revision taking place between provisional and revised in the new series is difficult to estimate just yet. Now, we use MCA 21 data for the full year, against the earlier ASI (Annual Survey of Industries) data. But I do not see a big issue. Statistically speaking, earlier the projections are made, higher is the standard error. Same is with the forecast. The standard error in a one-year forecast is lower than that in the case of a two-year forecast. Those are known statistical differences. I do not think it will make much of a difference here as the change in time period is little.

In case of early advance estimates, will you be making assumptions for the second half?

If I give an estimate in the first week of January, I will have data that is released till December. Mainly, we will have GDP data till the second quarter, which releases on November 30. The only additional information will be the numbers that come in December like Consumer Price Index and Wholesale Price Index. While the Index of Industrial Production numbers will be till October, we may be able to get core sector. There may be other data points that our team is looking at and trying to incorporate. Some data we may be able to chase, where we feel there is space to get the numbers earlier.

What kind of the chasing will you do?

I know when different points of data come in. The current flow I can tell you and what is readily available in December. When we look at our data calendar, there are observations which go into advance estimates. If we find there is something there, which in our judgement or the organisation concerned is relevant, we will try to make use of it. The current advance estimate works with data in January. One number comes out in the middle of February, which is the agriculture ministry’s advance estimate. National accounts is in touch with the agriculture ministry, even though the number is not finalised. But they have a sense where it is going; they keep that in mind when they prepare the advance estimates of GDP. This sort of dialogue between various data-producing entities will continue. There is no fixed formula; it is simply an exercise which will be undertaken.

Will the advance estimates and third quarter numbers come on two different dates? They come on February 7-9 nowadays.

We will have to come out with a revised calendar. But you have to give us time.I will have to work these things out.

Have you formed a working group to do the exercise of bringing forward the advance estimates?

I have not formed any working group. We will put it out in public domain, if we do.

If you release the Q3 estimates in February, which will likely be before the Budget is passed, how can the change be incorporated if the divergence is significant?

Aren’t we starting with a hypothetical assumption that there will be errors? Earlier, there was no additional data release between the time Budget was presented and passed. Now third-quarter numbers will be available when the Budget is taken up for final discussion. In case there has been an error of any magnitude in advance estimates, it will be visible when the Q3 numbers come in. If that is also along the same line, you get the confidence that the full year will end up pretty much as you had projected it to be. But, if for any reason, data available for January and February present a slightly altered picture, the Parliament and finance minister will point that out during the Budget discussions and appropriate measures will be taken.

But aren’t those mainly on giving or taking away exemptions?

But those could also be taking away taxes or imposing additional taxes, increasing or reducing rates. Already, the finance ministry constantly works out scenarios and contingencies - based on whatever changes the government decides to make - to accommodate in the Budget. After all, Budget discussion is not a rubber-stamping operation. This is not an issue from a larger public policy perspective. At the end of the day, you will have more information than less. Your Budget exercise will be completed in time. Once complete, it will carry the same degree of confidence, probably more than it carried in the current structure.

For the past two years, your advance and provisional estimates of GDP are more or less the same. Will that change?

I can’t predict that. I can’t guarantee that and I don’t intend to.

Between Budget presentation and passage in Parliament, do you think there will be a huge change due to additional data points?

I will have a revised calendar. If I make a GDP number (third quarter) before the Budget is passed, it is up to the finance minister to include it whichever way he deems fit in his final Budget address. Third-quarter GDP would come in by then. Somebody may raise it, he (the finance minister) will respond to it. It does not change or affect coherence or integrity of the Budget process in any significant way. It only requires him (FM) to address it.

Revised IIP has not come out so far. Is it not too late for 2011-12 base-year IIP to be introduced now?

This will be a faster revision than last time. Last time, we did 2004-05 revisions and completed it in 2011. I am still in 2016. If I have to stay with the last time’s revision, I have a year-and-a-half left. We will speed it up.