IMF's 'C' Grade for India's National Accounts Statistics
The International Monetary Fund (IMF) has given India a 'C' grade for its national accounts statistics, a significant matter of concern given India's robust data collection and analysis apparatus. A 'C' grade indicates issues in data that hinder economic surveillance.
Implications of the 'C' Grade
- National accounts encompass macro indicators like GDP and GVA, sectoral metrics, investment levels, consumer spending, and export performance.
- A 'C' grade places India alongside China in terms of national accounts quality, an unfavorable comparison.
- Imprecise metrics hinder effective policymaking.
Issues Highlighted by the IMF
- The outdated base year of 2011-12 for national accounts, Index of Industrial Production (IIP), and Consumer Price Index (CPI).
- Outdated data impairs the Reserve Bank of India (RBI)'s monetary policy.
- India's CPI received a 'B' grade due to the outdated base year and excessive food weightage, affecting accurate price movement capture.
Government's Response and Initiatives
- Updating base years and methodologies for national accounts, CPI, and IIP, with new series expected by early 2026.
Challenges in Capturing the Informal Sector
- The informal sector remains difficult to quantify due to its unregistered and cash-based nature.
- Accurate estimates are crucial for understanding the economic growth rate and the well-being of the majority of India's population.
Improvements and Future Prospects
- Past improvements include the 2011-12 series with granular data from the corporate sector using the MCA-21 database.
- The inclusion of GST data in GDP estimation in future series is a positive development.
The IMF's assessment underscores the need for timely data releases and updates to enhance the accuracy and reliability of India's national accounts.