* A third of the firms in MCA-21 database used to calculate GDP found dodgy
* Results from the MCA-21 database survey were so disappointing that two reports based on it had to be junked
NEW DELHI: A key database introduced in India’s new gross domestic product (GDP) series has now been found to be full of holes, raising fresh questions over the controversial and contested GDP numbers in Asia’s third-largest economy.
A study conducted by the National Sample Survey Office (NSSO) in the 12 months ended June 2017 and released last week has found that as much as 36% of companies that are part of MCA-21 database of companies and are used in India’s GDP calculations could not be traced or were wrongly classified.
The results were so disappointing that two detailed reports based on the survey had to be junked. It is worth noting that these companies were deemed as “active companies" by the ministry of corporate affairs (MCA), which includes any company that has filed returns at least once in the past three years on its list of active firms.
Statisticians say the use of the untested database in India’s national accounts also raises troubling questions about the decline of the Central Statistics Office (CSO), which was once a globally renowned institution, and the reliability of India’s official statistics.
“This is a devastating blow for CSO," said R. Nagaraj, a professor at the Indira Gandhi Institute of Development Research in Mumbai. “Some of us had repeatedly asked CSO officials to verify the MCA-21 numbers before using them in national accounts, but they finalized the new series without adequate scrutiny and debate."
The key change in the new GDP series launched in 2015 was the use of MCA-21, which CSO sourced from MCA. Even at the time it was being introduced in the national accounts calculations, several economists had raised questions on this issue (see “The truth behind India’s new GDP numbers", Mint, 2 April 2015). Nagaraj was among the first to raise red flags on this.
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