A study has raised questions raised over the quality of the MCA-21 database, which is a crucial part of the new GDP series math.
New Delhi: A National Sample Survey Office (NSSO) report has highlighted deficiencies in key government database of Indian companies, an observation that economists say could have consequences for the credibility of India’s GDP numbers.
A technical study conducted by the NSSO between June 2016 and June 2017, which examined parts of the corporate affairs ministry’s database, found that 37% of the companies could either not be traced, had shut down or were wrongly classified in terms of what sector they belonged to.
This study was recently uploaded on the survey office’s website.
The quality of ministry’s company database, often referred to as ‘MCA-21’, has been in the spotlight over the last four years, after the Central Statistics Office made it a key component of how it calculated the new GDP series.
While the government has maintained that using the MCA-21 database allowed for a more granular approach, as it drills down to the level of balance sheet data, some economists have argued that it is untested and may have unknowingly boosted India Inc’s contribution to the country’s growth figures.
“The use of MCA database in particular could have misleadingly enlarged the private corporate sector’s share in the Indian economy and its growth rate,” R. Nagaraj, a professor of economics at the Indira Gandhi Institute of Development Research, wrote in The Wire last year.
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