06/12/2020 Stat of the economy: Understanding data in the time of pandemic - The Economic Times

News Swarnabha

English Edition | E-Paper

Home ETPrime Markets News Industry RISE Politics Wealth MF Tech Jobs Opinion NRI Panache ET NOW More

Morning Brief Podcast Economy Industry Politics and Nation Company Defence International ET Evoke Elections ET Explains More

Business News › News › Economy › Indicators › Stat of the economy: Understanding data in the time of pandemic

Stat of the economy:

Understanding data in the time of
pandemic

No doubt, in normal circumstances, all these projections are taken seriously. Today the question is whether companies will rely on these numbers?

Synopsis

The International Monetary Fund (IMF) has forecast an 8.8% GDP growth for India in 2021-22. Economists and
statisticians say if the economy starts recovering — GDP has contracted by minus 7.5% in the September
quarter, from minus 23.9% in the June quarter — the graph next year is bound to be a mirror image of what
would be achieved this year.

One of the least talked about victims of the BACK TO TOP

coronavirus pandemic is economic data. The time-

https://economictimes.indiatimes.com/news/economy/indicators/stat-of-the-economy-understanding-data-in-the-time-of-pandemic/articleshow/79584120.cms 1/11
06/12/2020 Stat of the economy: Understanding data in the time of pandemic - The Economic Times

tested methods of interpreting and understanding

statistics make little sense now. Just as the virus
refuses to abandon a patient — post-Covid
complications are considered as lethal as the disease
itself — the pandemic’s aftershocks on data are
equally disruptive. Those could well be felt for a couple
of years.

Sample this. An 8-10% growth of India’s gross domestic

product (GDP) for the rst quarter of next scal year
would have been a matter of jubilation in normal
circumstances. Not anymore.

The International Monetary Fund (IMF) has forecast

an 8.8% GDP growth for India in 2021-22. Economists
and statisticians say if the economy starts recovering BY

Shantanu Nandan Sharma

— GDP has contracted by minus 7.5% in the
September quarter, from minus 23.9% in the June ET Bureau

quarter — the graph next year is bound to be a mirror 9 MINS READ

Dec 5, 2020, 11:11 PM IST
image of what would be achieved this year. After all,
quarterly GDP growth, often used as a reliable
indicator for business decisions across the world, is Share This Article
measured from the level a year ago. In other words, if
an economy shrinks, say, by 23.9% in a quarter, a slight
improvement of the situation could show a massive
growth in the corresponding quarter of the next scal 1

year. This even if the production does not surpass the FONT SIZE SAVE COMMENT

earlier level.

BACK TO TOP

https://economictimes.indiatimes.com/news/economy/indicators/stat-of-the-economy-understanding-data-in-the-time-of-pandemic/articleshow/79584120.cms 2/11
06/12/2020 Stat of the economy: Understanding data in the time of pandemic - The Economic Times

Former chief economic adviser and chairman of

Foundation for Economic Growth and Welfare Arvind
Virmani says the usual methods used to collect macro
data become redundant during a turbulence of this
magnitude. “During such times, it is useful to look at
other indicators of the economy to get a better picture
of what is happening. I have found the IIP (Index of
Industrial Production) and the CMIE (Centre for
Monitoring Indian Economy)’s unemployment rate
useful,” he says.

Corporate
"Usual macro data collection India,
methods for GDP are designed which
usually
to measure normal uctuations
relies on
in the economy. hen there is BACK TO TOP

an e traordinary shock, from a

https://economictimes.indiatimes.com/news/economy/indicators/stat-of-the-economy-understanding-data-in-the-time-of-pandemic/articleshow/79584120.cms 3/11
06/12/2020 Stat of the economy: Understanding data in the time of pandemic - The Economic Times

pandemic or great depression,

it is useful to look at other
available indicators of the
economy to get a better picture.
I have found the IIP with its
sub-sectoral details and the
CMIE’s unemployment rate
useful."
— Arvind Virmani, Chairman, Foundation for
Economic Growth & Welfare

macroeconomic numbers before taking key

investment and operational decisions, have suddenly
realised they can no longer bank on data they are
familiar with. The situation is unprecedented for
them, though the Indian economy has slipped into the
red four times since Independence. During those days,
agriculture was the mainstay of the economy and one
bad monsoon was enough to drag down the numbers.
Also, the private sector’s participation in the economy
was limited. Today, the private sector is a big driver of
economic growth. It is worrisome that India Inc is
unlikely to embark on expansion and investment
drives unless they can get reliable macroeconomic
numbers.

So how do
"“ here the economic CEOs
distortion is so much, you can’t navigate
these
do a simple comparison of two
choppy
numbers. Quarterly numbers of waters?
ne t FY will have to be NVS Reddy,
compared with those of a pre- managing
director of
Covid period. e are also Hyderabad
looking at non-economic Metro Rail
numbers such as behavioural Ltd, says his
patterns." company
has been
— NVS Reddy, MD, Hyderabad Metro Rail Ltd going
beyond BACK TO TOP

macroeconomic numbers. “For our kind of business,

we are also looking at non-economic numbers —
https://economictimes.indiatimes.com/news/economy/indicators/stat-of-the-economy-understanding-data-in-the-time-of-pandemic/articleshow/79584120.cms 4/11
06/12/2020 Stat of the economy: Understanding data in the time of pandemic - The Economic Times

change in behavioural pattern of passengers and

trends on work-from-home.” Hyderabad Metro
resumed operations three months ago. But it is still
carrying only one-third of its usual passenger
numbers. The company is looking at other revenue
sources such as real estate and advertisements to
ramp up its nances, Reddy adds.

The
" hen numbers tank transport
substantially, use of sector was
one of the
percentages over depleted
worst-hit
waves does not serve any sectors in
purpose. Ideally, the period the crisis.
immediately before the Even
though the
outbreak should be sector’s
benchmarked to 100, and all revenues
subsequent quarters compared plummeted,
with that. e can talk about its
expenditure
growth rate when the inde remained
bounces back to 100." high. There
— Vinayak Chatterjee, Chairman, Feedback Infra is a need for
a new index
to
understand quarterly GDP growth, says Vinayak
Chatterjee, chairman of infrastructure nance
company Feedback Infra. The percentage-based
growth data used now is of little value in today’s
circumstances.

“Ideally, the period immediately before Covid which

was Q4 of 2019-20, should be benchmarked with an
index of 100 and all subsequent quarters should be
looked at in comparison to that. We can talk about
growth rate once the index bounces back to 100 (GDP
level equalising Q4 of 2019-20),” he says. Corporate
India says company numbers should also be seen in a
similar way.

Shailesh
"After the outbreak we went Pathak,
through three Rs — resilience CEO of L&T BACK TO TOP

in April, restart in May and

https://economictimes.indiatimes.com/news/economy/indicators/stat-of-the-economy-understanding-data-in-the-time-of-pandemic/articleshow/79584120.cms 5/11
06/12/2020 Stat of the economy: Understanding data in the time of pandemic - The Economic Times

restoration in September. Ne t
year’s budgeting process and
monthly targets will not be
based on the data of April-
August."
— Shailesh Pathak, CEO, L&T Infrastructure
Development Projects Ltd

Infrastructure Development Projects, says the usual

monthly target of companies can no longer be
compared with those of the lockdown-hit months.
“Next year’s budgeting process and monthly targets
will not be based on the months of April to August
2020, which were highly unusual. October onwards, it
is back to pre-Covid performance,” he says.

BACK TO TOP

https://economictimes.indiatimes.com/news/economy/indicators/stat-of-the-economy-understanding-data-in-the-time-of-pandemic/articleshow/79584120.cms 6/11
06/12/2020 Stat of the economy: Understanding data in the time of pandemic - The Economic Times

Government agencies deal with a much wider range of

data. In addition to GDP data, the National Statistics
O ice (NSO) releases a monthly IIP, Consumer Price
Index as well as a separate food price index. Every
month, these agencies also release export-import data
and an index of eight core industries. It also compiles
an annual document on energy statistics and
undertakes surveys that include a once-in-a-decade
giant economic census covering a wide household
sample.

But collecting data and doing sampling right can be a

tricky business in India. The informal sector is so vast
that it forms almost half of the nation’s GDP. To arrive
at a data that would be accepted, the agencies need to
bank on surveys as well as proxies, such as GST data
for the purpose of understanding trends in informal
trade.

Former chief statistician of India Pronab Sen says the

use of proxies might work well in normal
circumstances, but not during a pandemic. “The
proxies may not be very accurate during this sort of a
pandemic. That’s why many of us believe the
unorganised sector has su ered more than what was
captured in the GDP data of the rst two quarters.
Both Q1 and Q2 gures are better than actualities,” he
says, levelling a serious charge on the process of
arriving at the GDP data.

The government agencies have issued clari cations

and revisions at times. While releasing the monthly
IIP, for example, a footnote is attached: “It may not be
appropriate to compare the IIP in the post-pandemic
months with the IIP for months preceding the Covid-
19 pandemic.”

Reading data correctly is always a challenging task.

But this pandemic has put a question mark on the
e icacy of even projections by reputed international
rating and multilateral agencies. The very fact that the
agencies are forced to frequently revise their estimates
suggests uncertainty. The situation remains uid,
depending on the behaviour of the virus and the BACK TO TOP

smooth rollout of a vaccine.

https://economictimes.indiatimes.com/news/economy/indicators/stat-of-the-economy-understanding-data-in-the-time-of-pandemic/articleshow/79584120.cms 7/11
06/12/2020 Stat of the economy: Understanding data in the time of pandemic - The Economic Times

Goldman Sachs, for example, recently revised India’s

GDP forecast to a contraction of 10.3% for 2020-21
from a contraction of 14.8%. In October, IMF further
slashed India’s GDP projection for the FY to a
contraction of 10.3%. In June, it had projected a
contraction of 4.5%.

No doubt, in normal circumstances, all these

projections are taken seriously. Today the question is
whether companies will rely on these numbers?

Subhra Sankar Dhar, an associate professor of IIT-

Kanpur and the recipient of Prof CR Rao National
Award in Statistics, appears to be optimistic. He says
statistical models are available to even capture a
situation as turbulent as the one seen in an ECG
(electrocardiography) graph — which displays the
electrical activity in a heart. But he acknowledges the
disruptions engineered by the pandemic and the
subsequent lockdown are so enormous that 2020-21
could end up being counted as a missing year. “For
statistical calculations, there should be a jump from
2019-20 to 2021-22. This missing year should be
substituted by predictions based on previous data, for
example, the middle value of data for a decade,” he
adds.

That appears to be a robust solution for future

statistical operations. But the problem is the “missing
year” is still on, and data from this period is critical for
future investments.

How to Read the Numbers

The quarterly GDP growth rate for the next scal
will be based on the depleted levels of the current
year and will be considered of little value.

Economists are weighing import data to judge the

health of domestic economy.

Sub-sectoral details of IIP numbers are considered

relevant.

Companies are benchmarking monthly targets with

pre-Covid realisations.
BACK TO TOP

https://economictimes.indiatimes.com/news/economy/indicators/stat-of-the-economy-understanding-data-in-the-time-of-pandemic/articleshow/79584120.cms 8/11
06/12/2020 Stat of the economy: Understanding data in the time of pandemic - The Economic Times

Non-economic data such as work-fromhome trends

are gaining currency.

1 COMMENTS ON THIS STORY

Pratyay Bhaumik 7 hours ago

Valid argument. Not only GDP, this assessment is also true for sensex and Nifty. You can claim
that it is 67 percent up from March - April low ,but actually it is just 10 percent up from pre
covid state. March low is just a number and should not be a point of standard reference .But
there is a... Read More

VIEW COMMENTS ADD COMMENTS

POPULAR WITH READERS

Why not open Indian Small-caps are slowly coming Rally in debt mutual funds is
companies, both stressed and back into the limelight: Here's coming to an end: Steps
prime performers, to foreign how to play this theme now investors should take to
lenders? prepare for coming yrs

6 mins read 6 mins read • By Narendra Nathan 14 mins read • By Sanket Dhanorkar

MORE STORIES ON ECONOMY

MORE FROM
ECONOMY

BACK TO TOP

https://economictimes.indiatimes.com/news/economy/indicators/stat-of-the-economy-understanding-data-in-the-time-of-pandemic/articleshow/79584120.cms 9/11
06/12/2020 Stat of the economy: Understanding data in the time of pandemic - The Economic Times

AGRICULTURE

hy India’s agri
mechanisation begins and
ends with tractors: blame
puny landholding, weak
nancing
12 mins read • By Rajiv Ghosh

TRADE BANKING TRADE

Why Shaktikanta View: Direct cash
RCEP: India, out Big boys of A less Das can't a ord transfer is not the
on a self-reliance lending rebound protectionist to follow other vaccine for
walk, tossed a to pre-pandemic regime, past ties: central banks' reviving GDP. It’s
USD25 trillion levels. Why why Biden means Covid playbooks not even anti-
market. Here’s Indian banks are good business for 5 mins read • By MC viral remdesivir
what others got. at an in ection India in global Govardhana Rangan
6 mins read
14 mins read • By point. trade
Madhavankutty G
12 mins read • By 11 mins read • By
Madhavankutty G Madhavankutty G

Search News, Stock Quotes & NAV

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
BROWSE
COMPANIES:
1 2 3 4 5 6 7 8 9

Quick Links
Indian Navy Day GST WhatsApp update Reliance Jio
Earthquake today Mukesh Ambani Instagram update Facebook update
Mark Zuckerberg Bill Gates Jeff Bezos Elon Musk
Infosys Layoffs TCS Layoffs Snapchat update

Trending Now Popular Categories

US election World News Morning Brief Podcast Economy
Narendra Modi GDP Growth Industry Politics and Nation
Politics News Nita Ambani Company Defence
Anil Ambani Nirmala Sitharaman International ET Evoke
Defence Economy Elections ET Explains
Headlines Today Sports Science
India Unlimited Environment
ET TV Latest News
BACK TO TOP

https://economictimes.indiatimes.com/news/economy/indicators/stat-of-the-economy-understanding-data-in-the-time-of-pandemic/articleshow/79584120.cms 10/11
06/12/2020 Stat of the economy: Understanding data in the time of pandemic - The Economic Times
Hot On Web In Case You Missed It
Justin Trudeau Farmers protest Live updates Iqbal Mirchi Ashok Gehlot
Coronavirus Live updates Sun Pharma Xi Jinping Cyclone burevi
Sensex today Aadhaar mobile number Justin Trudeau Joe Biden
veri cation VI IRCTC
US elections 2020 What are multi asset funds Ayodhya Ram Mandir Narendra Modi announcements
What are balanced mutual funds Global markets Gita Gopinath Coronavirus in Delhi
Mutual funds Breaking news Amartya Sen Delhi Fog
YES Bank share price SGX Nifty Delhi Winters Mumbai Fire
Sensex Live IRCTC share price WhatsApp Down
Infosys share price

ET Verticals More From Our Network

Auto News Retail News इकनॉ मक टाइ Pune Mirror Bangalore Mirror
Health News Telecom News Ahmedabad Mirror ItsMyAscent Education Times
Energy News IT News Brand Capital Mumbai Mirror Times Now
Real Estate News Marketing & Advertising News Indiatimes महारा टाइम् ಜಯ ಕ ಾ ಟಕ
Technology News CFO News Go Green AdAge India Eisamay
IT Security News IGN India IamGujarat Times of India
Samayam Tamil Samayam Telugu Miss Kyra
Bombay Times Filmipop MX Player
Newspaper Times Prime Colombia
Subscription
NBT Gold Podcast Ei Samay Gold Podcast MX ShareKaro App
MX TakaTak App

Other Useful Links Services

About Us Subscribe to ET Prime Longwalks App
Book your Newspaper Subscription Create Your Own Ad
Advertise with Us Terms of Use & Grievance Redressal
Privacy policy Contact Us
RSS DNPA Code of Ethics

Follow Us On: Download ET App: SUBSCRIBE

TO OUR
NEWSLETTER

Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service

BACK TO TOP

https://economictimes.indiatimes.com/news/economy/indicators/stat-of-the-economy-understanding-data-in-the-time-of-pandemic/articleshow/79584120.cms 11/11