After Independence, one of the challenges faced by the country's planners was that there wasn't enough primary data available on which to base economic policy decisions. The British had paid scant attention to it and a serious gap was felt when it was time to set the second Five-Year Plan (1956-61) rolling. Thus was born the National Council of Applied Economic Research (NCAER) in 1956. The foundation stone of the think tank's current office building was laid by non other than Prime Minister Jawaharlal Nehru in 1959.
In the last 50 years, the priorities of economic planners have changed and so have the demand for primary data analysis by the corporate sector. NCAER Director-General Suman K Bery spoke to Bhupesh Bhandari and Ajay Modi on the institution's past and prospects in the days to come. Excerpts:
How has applied economic research evolved in the last 50 years? How is NCAER's work different from what it was 50 years ago?
In the whole world, applied economic research is really a craft of the last 50 years or the post-war period. It owes its existence to the availability of data and development of computing power. India and the US have turned applied economic research into an industry.
Our country had experienced economic stagnation in the first half of the 20th century, while the Soviet Union had surged ahead. Economic transformation of the country was a crucial agenda of the Congress party as well as leading businessmen in those days and this was reflected in the Bombay Plan.
This was probably the first time that the economy was on the political agenda of the country. The aim was elimination of poverty, though the ultimate goal was self-reliance. The private sector also had an idea that it required data for its own use.
In the last 50 years, we have moved from investment planning to policy planning. In that period, industrial growth was the preoccupation of the government. However, now we focus more on the analysis of trade policy and the role of the financial sector.
There is continuity but the tools have changed. Our approach has moved from descriptive research to behavioural research. Earlier, we simply studied the broad parameters of the economy, but now we try to understand the impact of policies. Now, we try to seek causal possibilities to identify what is at work. We ask different questions now.
Give us an example.
For a long time, the belief was that the success of primary education depended on access. So the policy imperative was to build more schools. Same for healthcare. But it was later found out that in spite of better access, many children dropped out of schools. So the next round of research came in, which was more behavioural in nature, which showed that children would stay in school if there was a compelling economic reason for it.
But how has the focus changed over the years?
In the 1960s, it was on what are the fundamental resources in the country. In the 1970s, the focus was on agriculture and the behaviour of rural households. In the 1980s, we saw a rapid growth in consumer studies. This was helped by the arrival of Prakash Tandon on the NCAER board after a very successful career at HLL. But this was not a cross-cultural development.
In the beginning, John Sinclair and JRD Tata had served on our board. In the 1990s, we got thinking about economic reforms and liberalisation. Now, we are doing a wide range of research. We were recently contracted by the UNDP to look at the socio-economic impact of HIV AIDS.
How much of your business do you get from the private sector?
About 45 per cent of the contracts are from the Central and state governments, another 30 per cent from the private sector and 25 per cent from overseas.
There are several other institutions that collect primary data and analyse it. What is NCAER's USP?
We take pride in the rigour of our sampling. Right from the beginning, we have had the tradition of being very rigorous and imaginative in our sampling. We have on our lists over 100,000 households for intensive questioning, which is fairly large for a non-profit agency.
We believe in asking questions on a limited number of products. This helps us keep the questions simple and, therefore, get better results. We tend not to classify households into income categories. If you start by pigeonholing people in a category, you will not be able to observe variance in consumption. We classify households on the basis of observed consumption.
Pure data collection is a commodity. Our expertise is in gathering and interpreting data as well as analysing policy implications. Trying to get the truth on the behaviour of one-fifth of humanity is a complex process. There should be multiple agencies to capture what's going on.
We were contracted by USAID in the early-1970s to study the impact of the Green Revolution on fertility. The questionnaire put together by NCAER was quite pathbreaking for its time. What's more impressive is that NCAER has built a longitudinal data on those households and their progeny. It has been 35 years, but researchers are still using that data.
Your quarterly forecasts on the economy are one amongst many. Forecasts made by investment bankers and industry associations are based on some interface with business and, hence, look more credible. So what is different about your forecasts?
In the US too, there are 70-80 institutions that publish forecasts, some are very model-driven, while others are driven by feel. We are closer to international institutions which are more model-driven and not an aggregation of sectors. We try to capture the impact of policy change and pay a little more attention to what is going on in agriculture. What is the way ahead for NCAER: contract research or policy analysis?
We have to be realistic. We are not working to become an institute of fundamental research. We should have a blend of contract-driven research and policy analysis. This we need to do if we want to attract the best people in the business. We will also enter into many more partnerships with domestic as well as international institutions to link our skills with theirs.
As global interest in India grows, the demand for economists also goes up. Have you seen a churn in your ranks because of that?
Many of these research houses are in Mumbai. So that is a natural protection. But we have lost some people to the growing KPO sector that is coming up at Gurgaon.
If people look at NCAER for well-trained people, I think it is healthy. I also take comfort from the fact that many of these people who left us have expressed the desire to come back. We are trying to check the turnover by giving interesting work to our people.
