JOIN US“UPA-2 splurged on social welfare expenditures in order to gain rural votes and damaged the macro-economic parameters”.
When he became the BJP prime ministerial candidate, Narendra Modi claimed that the then NDA government led by A B Vajpayee had delivered more GDP growth than the ruling UPA led by the Congress. He quoted a figure of 8.4 per cent annual GDP growth versus the recent estimates of 4.5 to 5 per cent. Finance Minister P Chidamabaram shot back saying this was a wrong figure and that the GDP growth over the NDA’s 6 year rule was well below 8 per cent in most years. NDA showed 8.5 per cent in its last year, and lower figures in earlier years. Hence its average GDP growth over its 6-year rule was low.
This is a classic use of statistics to draw contradictory conclusions. NDA’s last year posted the highest growth of GDP but the average over the 6 years of its rule was lower. UPA in its ninth year has shown the worst growth in the last nine year of its rule, but its average over the period is much higher. Each politician picks the figure that supports his political argument.
If we explore the GDP figures, we find many things that make the number unreliable. The Central Statistical Organization makes a tentative estimate for a year, revises it after a year, and within three years, has a final figure. The estimation itself makes many assumptions. One of them is regarding the untaxed economy in rural India. A periodic survey gives an estimate that is then incorporated. It is said it underestimates the national GDP by at least 10 per cent. Many have said that the black economy in India may be as much as 50 per cent of reported GDP and if that is taken into account, the size and growth would be much bigger.
It is a characteristic of our media and politicians that we are asked to believe that the growth figures in any year are due to the policies and actions of the ruling government. Obviously, this can only be partially true. For instance, the growth in the 1990s was also due to the liberalisation policies that Rajiv Gandhi’s government introduced.
These included “broadbanding” of industrial licences so that a manufacturer could move into related lines without a new licence. Narasimha Rao’s government introduced dramatic new policies and they have benefited the economy over the years. UPA-2 splurged on social welfare expenditures in order to gain rural votes and damaged the macro-economic parameters. This year’s economic setbacks are related to policies that started six years ago.
Rajiv Gandhi made a statement when he was Prime Minister that only 17 per cent of government’s social welfare expenditure reaches those it is meant for. There was no basis for his number. Studies by National Council of Applied Economic Research showed for instance, that about 40 per cent of cheap kerosene for the poor was diverted to adulterating diesel for trucks. Planning Commission Deputy Chairman Montek Singh Ahluwalia has stated that in the case of the public distribution system, Rajiv Gandhi’s figure was right.
Welfare expenditures
Recent studies of the rural job scheme in some states show that 50 per cent and more of the money spent actually reached those it was meant for. But Rajiv Gandhi’s figure of leakage of about 83 per cent of welfare expenditures has stuck. Politicians and analysts have no hesitation in quoting it as the gospel truth. It is not, and has little basis even in the numerous sample surreys that have been conducted on such welfare programmes.
Another example of the use of statistics to make political points is in discussions on inflation. The single national index of prices is the wholesale price index (WPI), measured every week. Measurements are through field reports on numerous products and services produced.
Depending on their contribution to the economy, weights are assigned. The WPI includes many articles that go into other processing, fuel and power, mining etc. The consumer items may account for around 40 per cent of the total. So, talk about inflation and the common man are based on an index that includes items that might move in different price directions than those bought by the consumer. Depending on the political point to be made, politicians use the WPI or individual consumer items (like onions or sugar) to say that the consumer is being hit by inflation.
The poor buy goods in small quantities but pay more than the market price. Their higher payments do not figure on the price index. For them, inflation is worse than the figures suggest. Some weeks ago an eminent economist said that there were 1,000 or so child deaths in India every day, due to inadequate foods. This was contradicted by others. The figure of 1,000 is probably an exaggeration, but it helped government in pushing for the Food Security Bill. Statistics, true and false, are most times based on many assumptions and collection methods, and influence us to believe in the effectiveness of one policy over another.
As citizens, we must be careful while giving credence to statistics quoted by politicians. Indeed, we must look more closely at all the statistics given to us and examine their underlying assumptions and methods of collection. It is not surprising that Mark Twain quoted Benjamin Disraeli as saying that there are lies, damned lies and there are statistics. Aaron Levenstel put it even better when he said: “Statistics are like a bikini. What they reveal is suggestive, but what they conceal is vital.”