Running an economy, especially one that is in a predicament such as India’s today, is infinitely more complicated and the data demands are hence commensurately greater. A Data Big Bang effort along the lines proposed here would make that difficult task less challenging.
As the government responds to the challenges posed by the economic slowdown, there’s an ignored area of reform, where simple measures could have potentially big payoffs. This area relates to data, specifically the process of generating and disseminating reliable data.
Reliable data is important for several reasons. For some time, we have known that confidence — in the economy and government — is critical in shaping private actions. Keynes himself stressed the importance of “animal spirits” in getting entrepreneurs to invest. Others have stressed the importance of consumer confidence in getting households to spend on durable goods such as cars. There is something of a bootstrap effect at work: Confidence can change behaviour, which changes reality, and hence confidence.
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