📰 India’s cancer care facilities highly inadequate, says parliamentary panel
Systematic failure to address needs results in 20% higher mortality, says the Parliamentary Standing Committee on Science, Technology and Environment.
•India’s cancer care infrastructure is “highly inadequate” and forces a majority of patients to travel “thousands of kilometres” for treatment.
•The “systematic failure” to address the needs of patients contributes to a 20% higher mortality among Indian cancer patients than in countries with a “high” Human Development Index, says a report by the Parliamentary Standing Committee on Science, Technology and Environment.
•The committee was constituted to examine an expanded role for the Department of Atomic Energy, through the Tata Memorial Centre (TMC), to address India’s rising cancer burden. The committee, led by former Union Environment Minister, Jairam Ramesh, submitted its report to Rajya Sabha Chairman Venkaiah Naidu on Monday.
•The incidence, or the number of newly diagnosed cases of cancer annually, is about 16 lakh. The disease kills 8 lakh people annually. Among these are 140,000 fresh cases of breast cancer, 100,000 cervical cancer cases, and 45,000 cases of oral cancer among women. Among men, the top three cancers with the highest incidence are those in the oral cavity (1,38,000 cases), cancer of the pharynx (90,000) and those of the gastro-intestinal tract (2,00,000).
•“The Committee would like to lay emphasis on the fact that mortality to incidence ratio of 0.68 in India is higher than that in very high human development index (HDI) countries (0.38) and high HDI countries (0.57),” it notes in the report viewed by The Hindu.
•The International Agency for Research on Cancer expects India’s cancer burden to increase from an estimated incidence of 13 lakh cases in 2018 to about 17 lakh in 2035, and cancer deaths expected to rise from 8.8 lakh in 2018 to 13 lakh in 2035.
•“The Committee is especially worried to note that the incidence of cancer is very high in all North Eastern States, as it is higher than the national average for several types of cancer, showing a consistently rising trend over the past few decades,” the report emphasised.
•While the TMC is a major referral centre for cancer treatment, India’s National Cancer Grid is the bulwark of cancer treatment in the country, and with its network of 183 cancer centres, research institutes, patient advocacy groups, charitable organisations and professional societies, treats over 7,00,000 new cancer cases.
Hub and spoke
•Two-thirds of India's cancer patients were treated in the private sector and this forced 6 crore Indians below the poverty line because of “catastrophic healthcare related expenditure on cancer”. The Committee submitted its report in 45 days and it is the first such report this year. It recommended a ‘Hub and Spoke Model’ proposed by the TMC to better reach out to cancer patients nationally. This approach — already in practice in Punjab — has a network of centres, or hubs, capable of treating complex forms of cancer. They would be connected to other centres (spokes) capable of treating less complex variants of cancers. The idea is to ease access and minimise travel times for patients.
•“One hub would ideally cover about 4 crore patients and a spoke from 50 lakh-1 crore patients annually. Therefore, about 30 hubs and 130 spokes would be needed to be created to bridge the gaps in access to cancer treatment,” representatives from the TMC told the Committee.
India too lags behind as rising air pollution places additional stress on children.
•The 10th pneumonia and diarrhoea progress report card has found that health systems are falling short of ensuring the world’s most vulnerable children access to prevention and treatment services in the 23 countries that together account for 75% of global pneumonia and diarrhoea deaths in children under five.
•India, which is home to a large population of under-five children, accounts for a major portion of these deaths, notes the report.
•“Rollout of rotavirus vaccines, beginning in 2016, and the pneumococcal conjugate vaccine, beginning in 2017, helped India’s scores improve. India’s exclusive breastfeeding rate, at 55%, is among the highest of the 23 countries. However, the proportion of children receiving important treatments, as with many other countries, remains below targets. Half of the children with diarrhoea receive ORS (oral rehydration solution) and 20% receive zinc supplementation — to help protect against, prevent and treat pneumonia and diarrhoea,” notes the report.
10 interventions
•This report analyses how effectively countries are delivering 10 key interventions, including breastfeeding, vaccination, access to care, use of antibiotics, ORS, and zinc supplementation.
•Meanwhile, additional reports from organisations like Save the Children and UNICEF have noted that, in 2017, the highest risk factors for child pneumonia death in India were: 53% caused by child wasting, 27% by outdoor air pollution, and 22% caused by indoor air pollution from solid fuels.
•Pulmonologit Prashant Saxena from Max Hospital, Saket noted that children are the worst hit by sustained high levels of air pollution.
•These measures are proven to help prevent deaths due to these illnesses and could help achieve the UN’s Sustainable Development Goal target of reducing under-five mortality to at least as low as 25 per 1,000 live births by 2030.
Increase investment
•The report card concludes that progress continues slowly and that the global community must increase investment and support countries in developing smart, sustainable strategies that close gaps and accelerate progress.
•Globally, pneumonia and diarrhoea led to nearly one of every four deaths in children under five years of age in 2017. Released ahead of World Pneumonia Day, on November 12, the 2019 Pneumonia and Diarrhoea Progress Report Card, by the International Vaccine Access Center (IVAC) at the Johns Hopkins Bloomberg School of Public Health, describes progress in fighting pneumonia and diarrhoea in countries with the highest absolute number of deaths, and for the first time in countries with the highest rates of deaths from these illnesses.
•The Pneumonia and Diarrhoea Progress Report, issued annually for a decade, finds as in past years that immunisation coverage — the most frequently updated indicators in the report — generally makes up the highest scores. Use of exclusive breastfeeding continues to lag behind, as does access to treatment, particularly zinc supplements for diarrhoea.
Newer vaccines
•Bill Moss, Professor in the Department of International Health noted that newer vaccines such as rotavirus and pneumococcal vaccine are not yet reaching most children in these 23 countries, and access to treatments such as basic antibiotics and ORS is surprisingly low across most of the countries included.
•The report adds that 16 out of 23 countries assessed failed to meet the targets for any of 10 interventions to protect against and treat pneumonia and diarrhoea, as outlined in the World Health Organisation and UNICEF’s Integrated Global Action Plan for the Prevention and Control of Pneumonia and Diarrhoea. Three of the 23 countries met the 90% target coverage rate for at least four vaccines, while one was able to attain 90% level of coverage for all four treatment measures.
📰 BRICS Bond Fund likely on agenda
•Prime Minister Narendra Modi left on Monday to attend the 11th BRICS summit to be held on November 13 and 14 in Brasilia. He will hold a round of bilateral meetings with leaders of the BRICS member countries after reaching the capital of Brazil on Wednesday morning.
•Mr. Modi is expected to meet Russian President Vladimir Putin and Chinese President Xi Jinping on Wednesday ahead of participating in the BRICS Business Forum. The leaders are scheduled to have a restricted session on Thursday. The visit is also significant from the bilateral India-Brazil point of view as India is expected to host Brazil President Bolsonaro as the Republic Day Parade chief guest in 2020 January.
•A Russian official on Tuesday said that during the summit, BRICS will discuss formation of BRICS Bond Fund, which will help member countries conduct intra-BRICS trade in national currencies, avoiding the U.S. dollar. “Trust in the U.S. dollar is not as high as it was and why we want to extend national currencies within BRICS,” said the official.
•The summit will discuss the Afghanistan and Syria crisis. Both China and Russia have maintained dialogue with the Taliban even after the U.S. ended peace talks with the outfit. “Stable, peaceful and non-radicalised Afghanistan is the focus of Russian approach,” said the official.
•The member countries will hold the plenary session of the BRICS on Thursday after which a BRICS MoU between trade and investment promotion agencies will be signed.
📰 President's rule should be based only on ‘objective material’, said Supreme Court in Bommai case
A nine-judge Constitution Bench of the court in the Bommai case, which is the reigning authority on the use and misuse of Article 356, had held that political whim or fancy cannot form the basis for the President to proclaim central rule in a State
•Maharashtra Governor Bhagat Singh Koshyari's recommendation on Tuesday for President's rule in the State under Article 356 (1) of the Constitution should have been based on “objective material” and not on a political whim or fancy, if one goes by the Supreme Court verdict in the 1994 S.R. Bommai case.
•A nine-judge Constitution Bench of the court in the Bommai case, which is the reigning authority on the use and misuse of Article 356, had held that political whim or fancy cannot form the basis for the President to proclaim central rule in a State.
•“It is not the personal whim, wish, view or opinion or the ipse dixit of the President de hors the material, but a legitimate inference drawn from the material placed before him which is relevant for the purpose,” the court had said.
•Such objective material may be available in the report sent to the President by the Governor or otherwise or both from the report and other sources. Once such material is shown to exist, the satisfaction of the President based on the material is not open to question.
•Article 356 (1) has been deliberately drafted in a narrow language by the Founding Fathers so that political parties in the Centre does not misuse it to subvert federalism, it had noted.
•The proclamation of President's rule in a State is open to challenge if there is no supporting objective material. “It has further to be remembered that the Article requires that the President 'has to be satisfied' that the situation in question has arisen. Hence the material in question has to be such as would induce a reasonable man to come to the conclusion in question. The expression used in the Article is 'if the President is satisfied”, the court had observed.
•In other words, the President has to be convinced of or should have sufficient proof of information with regard to or has to be free from doubt or uncertainty about the state of things indicating that the situation in question has arisen.
•The court had stated that although the sufficiency or otherwise of the material cannot be questioned, the legitimacy of inference drawn from such material is “certainly open to judicial review”.
•The proclamation by the President under Article 356 is on the advice of the Council of Ministers tendered under Article 74(1).
•The judgment had explained that in a multi-party political system, chances are high that the political parties in the Centre and the State concerned may not be the same. Article 356 cannot be used for the purpose of political one-upmanship by the Centre.
•“The Council of Ministers under our system would always belong to one or the other political party. In view of the pluralist democracy and the federal structure that we have accepted under our Constitution, the party or parties in power [in case of coalition Government] at the Centre and in the States may not be the same. Hence there is a need to confine the exercise of power under Article 356[1] strictly to the situation mentioned therein which is a condition precedent to the said exercise,” the court had said.
•That is why the framers of the Constitution had taken pains to specify that President should proclaim central rule in a State only, and only, if a situation arises by which governance of the State is either disabled or prevented from continuing "in accordance with the provisions of the Constitution".
•Any other “situation” does not empower the President to proclaim Central rule in a State.
📰 BRICS strategic partnership for global stability, shared security and innovative growth
Russia backs the core point that BRICS, as a pillar of the emerging, fairer polycentric world order, has the same approach to key issues
•On November 13-14, 2019, Brasilia will host the 11th BRICS Summit. In the run-up to this key event of the year for our group, I would like to share Russia’s vision of the BRICS strategic partnership.
•The current Brazilian BRICS Chairmanship managed to achieve serious progress in all main pillars of cooperation — political, economic and humanitarian. Russia supports its Brazilian friends in their efforts to improve the practical impact of our multifaceted interaction on the prosperity of our states and people.
Aligning to global changes
•We welcome the statement made by Brazilian President Jair Bolsonaro in Osaka about the importance of strengthening the dialogue within BRICS, which will enable the BRICS countries to make the best use of ongoing global changes.
•Today, alignment of efforts of our countries is particularly important. Global politics continues to reel. Various regions of the planet still retain significant conflict potential. The arms control architecture is deliberately undermined — the U.S.’s unilateral withdrawal from the Intermediate-Range Nuclear Forces Treaty was a rather dangerous step. Structural imbalances in the world economy are yet to be overcome. A serious threat to global economic growth is posed by such unfair competition practices as unilateral economic sanctions, trade wars and flagrant abuse of the U.S. dollar status as the world reserve currency. The international community is yet to find effective responses to a whole number of critical challenges of our time — from terrorism to climate change.
•It got to the situation when there are attempts to replace the international legal system, established after the Second World War with the UN Charter remaining as its main source, with the so-called “rules-based order”, where “rules” were being invented in secret, in “small groups”, and then, depending upon a political situation, imposed on the whole world.
•Multipolarity is not a recipe for competition and chaos in international relations, as some of our critics say. On the contrary, this is the only order attuned to present-day realities, which should promote the comprehensive development of all states — both big and small — and enhanced mutually beneficial cooperation among us on the basis of shared interests.
Common goals
•Russia, as other BRICS countries, rejects diktat and pressure, blackmail and threats, let alone the use of force without the UNSC’s decision. In contrast, it proposes to follow the path of a mutually respectful dialogue aimed to reach the consensus that takes into account the interests of all actors in inter-state relations. We are convinced that any agreements on most important issues on the global agenda should be reached with the widest and equal participation of all stakeholders and be based on universally recognised legal norms. The BRICS countries are firmly committed to democratisation of international life and its development under the principles enshrined in the UN Charter, the principles of respect for cultural and civilisational diversity of the world, and the right of peoples to forge their destiny themselves.
•It is of fundamental importance that our approaches to key global and regional issues are the same or rather similar. We have consistently called for a peaceful and politico-diplomatic settlement of crises and conflicts in various regions of the world. We continue to be engaged in a comprehensive dialogue in such fields as counter-terrorism, international information security and the fight against organised crime and corruption.
•We can state with confidence that having entered the second decade of its activity, BRICS, being one of the pillars of the emerging fairer polycentric world order, plays an important stabilising role in global affairs, for which it has all the necessary capacity. The group accounts for almost a third of global GDP at purchasing power parity. Last year, BRICS even outperformed the G7 on this indicator.
•BRICS is becoming a magnet for many emerging economies. They are looking at us because the group protects values of multilateralism, supports transparent, non-discriminatory, open, free and inclusive international trade, and rejects unilateral economic restrictions and protectionist measures in developing international economic ties. In their statement following the meeting on the margins of the G20 Summit in Osaka last June, the BRICS leaders explicitly indicated their willingness to protect the pillars of the equitable multilateral trading system and the role of the World Trade Organization as its centre, and to advocate International Monetary Fund reform.
•The New Development Bank (NDB) created by the BRICS countries — one of the promising multilateral development institutions — works successfully. Only this year, the NDB Board of Directors has approved 12 new investment projects in the BRICS countries. And since the start of its operation in 2015, 42 investment projects worth over $11 billion have been approved.
•The work to strengthen the BRICS Contingent Reserve Arrangement (CRA) is ongoing. Its total capital of $100 billion is to be a guarantor of the BRICS financial stability in case of crisis.
•We appreciate the efforts of the Brazilian chairmanship to implement five-party initiatives in economy, science, innovations and health. We take a positive note of the systematically increased density of humanitarian exchanges — cooperation in the areas of culture, education, sport and youth policy is gaining momentum and people-to-people contacts are developing.
Russia’s turn next
•In 2020, Russia will take the helm of BRICS. We intend to ensure continuity and harmonious transition from the Brazil chairmanship to the Russian one. We will continue the policy of progressive and comprehensive enhancement of the strategic partnership of the BRICS countries. Certainly, we are interested in increasing financial and economic cooperation among the participating countries, effective industrial interaction and practical cooperation in developing and implementing new joint energy, telecommunications and high-tech projects. Our priorities include enhanced foreign policy coordination within leading multilateral fora, primarily in the UN, which will turn 75 next year.
•I am confident that in the storming ocean of world politics, the BRICS ‘ship’ will steer a steady course and further contribute significantly to maintaining international stability and ensuring global economic growth. The Brasilia Summit is aimed to be another important milestone in pentalateral cooperation and on its way to new prospects.
•In conclusion, I would like to wish peace, health, well-being and all the best to readers and to all nationals of the BRICS countries.
📰 The Western Ghats still home to a rainbow of butterflies
Three-day survey finds 191 species of the insect, 12 of which are endemic to the biodiversity-rich region
•The Western Ghats is still home to a kaleidoscope of butterflies. A survey that ended in the Wayanad Wildlife Sanctuary (WWS) on Monday could sight 191 species, 12 of which are endemic to the biodiversity-rich region.
•The first-time sighting of Silver forget me not, Common three ring, and Brown onyx was also recorded. The sighting of Silver forget me not was reported only from the Chinnar Wildlife Sanctuary in Idukki district of the State. The three-day survey was done jointly by the Forest and Wildlife Department in association with the Ferns Nature Conservation Society (FNCS).
In four ranges
•The survey was conducted in all the four forest ranges under the sanctuary, including Muthanga, Tholpetty, Kurichyad and Sulthan Bathery, simultaneously.
•The survey was mainly aimed at assessing the butterfly diversity in the forest areas of the region, which is vulnerable to climatic changes. It was also wanted to assess the availability of nectar plant and larval host plant, essential for the survival of butterflies. As many as 18 camps were set up.
•Four researchers, V.C. Balakrishnan of the Society for Environment Education, Payyannur; Balakrishnan Valappil and V.K. Chandrashekharan of the Malabar Natural History Society; and C. Sushanth of the Warblers and Waders, a Thiruvananthapuram -based nature lovers’ forum; and 70 butterfly enthusiasts, including students; took part in the survey.
•“The diversity of butterflies was very low in the forest areas where alien invasive plants such as Senna spectabilis invade other endemic plants, whereas the diversity was very rich in areas where plants such as Mikania micrantha and Lantana camera remained dominant,” the researchers said.
•The team reported 60 species of Nymphalidae, 49 Lycanidae, 45 Hesperidae, 21 Pieridae, 14 Papplionedae, and two species of Riodinidae, P.A. Vinayan, president, FNCS, said.
•“The sighting of 191 species of butterflies is an evidence of a healthy butterfly habitat in the region, but the degradation of the riparian forest in many part of the region may adversely affect the butterfly habitat in the near future,” Mr. Vinayan, who coordinated the survey, said.
Survey objective
•Warden P.K. Asif supervised the programme.
•“As the study on butterflies was also the study on nature and climate change, the survey report would help the Forest Department to prepare a forest management plan in the region in the coming years,” assistant conservator of forest Ajith K Raman said.
📰 C-295 transport plane clears cost negotiations
Tata-Airbus aircraft to replace Air Force’s ageing fleet of Avros
•The Defence Ministry has concluded cost negotiations with Tata and Airbus for the purchase of Airbus C-295 transport aircraft as part of the long-delayed Avro replacement programme of the Indian Air Force (IAF).
•“Cost negotiations for the C-295 deal have been completed. It is now being processed to put it up for clearance from the Cabinet Committee on Security (CCS). It is expected to be signed in the next few months,” a senior Defence official said.
•Initially, after the completion of cost negotiations, it was felt that a waiver from the Defence Acquisition Council (DAC) would be needed on some technical issues. But Defence sources said the issue “has now been resolved.”
•The IAF has 56 Avro transport aircraft which are in urgent need of replacement. A further six aircraft for a maritime mission role for the Indian Coast Guard have been added taking the total number required to 62, estimated to cost upwards of $3 billion.
Funds crunch
•While sources expressed optimism that the deal would be signed in this financial year, it is contingent on the availability of funds. The IAF has a situation where committed liabilities for this year are more than the capital allocation in the budget and few big ticket deals are on the agenda. For instance, the IAF recently concluded a deal for five additional Akash Surface-to-Air systems and a deal for 83 Light Combat Aircraft (LCA)-MK1A is expected to be concluded this fiscal.
•As part of the deal, 16 aircraft will be built by Airbus at its manufacturing facility and delivered in fly away condition and the remaining will be built locally by the Tata-Airbus joint venture under transfer of technology.
•The sole bid by Airbus and Tata with the C-295 aircraft for the Avro replacement programme was approved by the DAC in May 2015, but the contractual negotiations have been repeatedly delayed. The Request For Proposal (RFP) was issued to global firms in May 2013.
•This deal has become even more critical as a separate project to jointly co-develop and produce a Medium Transport Aircraft (MTA) of 20 tonnes with Russia to replace the An-32s in service was scrapped after initial design discussions.
•While the An-32s are being upgraded and are not due for immediate replacement as they have residual air frame left, the IAF has no future MTA lined up. In the absence of a new MTA development project, there is discussion on making the C-295 the replacement for the An-32 fleet in future.
📰 Centre wants States to ditch APMC for e-NAM
e-NAM has been promoted very much by the Union government and many States have agreed to take it up at their level, Ms. Sitharaman said
•States were being “cajoled to reject” the agricultural produce marketing committee (APMC) system in favour of a pan-India electronic trading portal that creates a unified national market for agricultural commodities, according to Finance Minister Nirmala Sitharaman. So far, the Centre had been focussed on reforming APMCs, allocating funds to upgrade them, and persuading States to adopt a model APMC Act.
•Speaking at a global conference on rural finance hosted by the National Bank for Agriculture and Rural Development (NABARD) on Tuesday, Ms. Sitharaman said the Centre was talking to States to “dismantle” the APMC system and move towards the electronic National Agriculture Market (e-NAM). “We’re also making sure that States are cajoled to reject the APMCs,” which, while having served their purpose at one time, were now posing many difficulties, she said.
•While the Centre has been promoting e-NAM since its introduction in 2016, it is not clear if the online portal is ready to bear the entire burden of agricultural trade. Only 1.6 crore farmers have registered on the portal so far, from among the almost 12 crore cultivators in the country. According to data presented in the Lok Sabha in June, only about half of those registered have benefited from the platform.
•Out of almost 2,500 APMCs, 585 in 18 States have been connected to the e-NAM portal so far. Interstate trade, which has the potential to give farmers wider market access and better prices, has 21 APMC mandi participants in 8 States so far.
•NABARD Chairman Harsh Bhanwala told The Hindu that APMCs required reforms to ensure that a transparent price discovery mechanism exists, particularly for spot prices. “Also, they need to have infrastructure available for storage, collateral management and quality control assessment,” he said, adding “so I think we need to enhance the APMC infrastructure.” In addition, point of sale should not be restricted to APMCs. There needs to be wider market access.”
•NABARD is now ready to operationalise a ₹2,000 crore agri-market infrastructure fund aimed at upgrading 585 APMCs and 10,000 gramin agricultural markets.
•On the sidelines of a different event on Monday, Chief Economic Advisor Krishnamurthy Subramanian told The Hindu that States should be provided with incentives to implement the APMC Model Act, on the lines of the incentives offered to get all stakeholders on board the GST platform.
•There may be special support in the offing for Jammu and Kashmir’s farmers. Over the last two months, NAFED has aided J&K’s apple farmers by procuring their crop. Ms. Sitharaman said NABARD had now been asked to aid peach, walnut and saffron farmers as well. In Ladakh, farmers would be encouraged to earn additional income by installing solar panels to generate renewable energy, she said. The Centre was also finalising plans to step up investment in J&K’s rural infrastructure. Official sources suggest that J&K’s allocation from the Rural Infrastructure Development Fund – about ₹400 crore out of a total budget of ₹28,000 crore in 2018-19 – is likely to be doubled in the coming year. There is also a proposal for a separate fund, now that the State has become two Union Territories under the direct control of the Centre.
📰 The problem with re-basing GDP estimates
Introducing a new series without any changes will only entrench methodological problems and affect data credibility
•In the next few months, the Central Statistics Office (CSO) proposes to replace the gross domestic product (GDP) series of 2011-12 base year with a new set of National Accounts using 2017-18 as the base-year. According to the chief statistician, this will be done as soon as the new consumer expenditure survey and the Annual Survey of Industries (ASI) results become available. Normally, rebasing is a routine administrative decision of any national statistics office.
Background to the dispute
•But these are not normal times in India for users and producers of the national accounts. For the past four years there has been a raging controversy over the current GDP figures on account of questionable methodologies and databases used. According to official data, the annual economic growth rate has sharply decelerated to about 5% in the latest quarter, from over 8% a few years ago. The reality may, however, be far worse. Independent studies using multiple statistical methods to validate the official GDP estimates by the former Chief Economic Adviser, Arvind Subramanian, and Sebastian Morris of the Indian Institute of Management, Ahmedabad, have suggested that the annual GDP growth rates during the last few years may have been overestimated by 0.36 to 2.5 percentage points.
•Why is there such distrust in the official GDP figures? To understand the origins of the dispute, one has to go back to early 2015 when the CSO released a new series of GDP with 2011-12 as base-year, replacing the earlier series with the base-year 2004-05. Periodic rebasing of GDP series every seven to 10 years is carried out to account for the changing economic structure and relative prices. Such re-basing usually led to a marginal rise in the absolute GDP size on account of better capturing of domestic production using improved methods and new databases. However, the underlying growth rates seldom change, meaning that the rebasing does not alter the underlying pace of economic expansion.
•The 2011-12 base year revision was different, however. The absolute GDP size in the new base year 2011-12 contracted by 2.3% (compared to the old series), and the annual GDP growth rate went up sharply from 4.8% in the old series to 6.2% in 2013-14. Similarly, the manufacturing sector growth rate for 2013-14, swung from (-) 0.7% in the old series to (+) 5.3% in the 2011-12 series. Such large variations in growth rates for the same year may be justified if the material conditions of production warranted. But the higher growth estimates recorded by the new series did not square with related economic indicators such as bank credit growth, industrial capacity utilisation or fixed investment growth. Thus began the questioning of the new GDP series.
Demonetisation as shock
•The suspicion of official output estimates became particularly intense after the demonetisation of high valued currency notes in November 2016. By most analyses, the economic shock severely hurt output and employment. For example, the Ministry of Finance’s Report on Income Tax Reforms for Building New India (September 2018; convenor: Arbind Modi), provided data on fixed investment in the private corporate sector based on actual corporate tax returns. It shows that the fixed investment to GDP ratio in the private corporate sector fell sharply from 7.5% in 2015-16 to 2.8% in 2016-17 (suspected to be on account of demonetisation). However, surprisingly, the ratio in the national accounts went up from 11.7% in 2015-16 to 12% in 2016-17.
•Similarly, chief economist of the International Monetary Fund, Gita Gopinath’s academic research paper (co-authored) published by the highly regarded National Bureau of Economic Research in the U.S. in May 2019 showed an adverse effect of demonetisation on growth rate. Yet, the official GDP for the year 2016-17 grew at 8.2%, the highest in a decade.
The root of the problem
•The source of the problem, according to many economists, is the underlying methodologies for calculating GDP (in the 2011-12 series) which they claim are deeply flawed, as well as the new dataset used in estimating the private corporate sector’s contribution. Some of the recent, prominent criticisms are as follows.
•In a first, the CSO estimated value addition in the private corporate sector using the statutory filing of financial results with the Ministry of Corporate Affairs. The private corporate sector accounts for about a third of GDP, and spans all production sectors, and roughly about half of the private corporate sector output originates in manufacturing. The database of the Ministry of Corporate Affairs has been criticised by many as unreliable; hence it is possible that the private corporate sector output has been overestimated. For example, the Ministry’s database on “active” companies — that is companies claiming to have submitted audited financial results regularly for three years — seems to contain many companies that are actually inactive (not producing output on a regular basis). Last year when the National Sample Survey Office (the government’s premier, independent, data-gathering agency), used the Ministry of Corporate Affairs list of active companies to canvass a sample of companies in the services sector, it found that up to 42% of the sample companies were not traceable, had failed to provide the information for the survey, or had failed to provide audited accounts.
•For estimating GDP of the private corporate sector, questionable methods are also used for blowing-up unverified “sample” estimates for the unknown and varying universe of “working” or active companies.
•State domestic product (SDP) estimation uses many of the same databases and methodologies used in all-India GDP estimation. The methodological changes made in the 2011-12 base-year revision have adversely impacted the quality of SDP estimates on two counts. First, the Ministry of Corporate Affairs data does not have factory identifiers (that is, location of production units, but only has the location of the company head office); it has distorted distribution of the SDP estimates across States. Second, for estimating value-added in the informal or unorganised sector, State-specific labour productivity estimates are unavailable in the 2011-12 series. Hence the method used distorts output estimation.
•The CSO has denied the claim that the underlying methodology is flawed and that there are serious problems with the new database being used. The official response throughout the debate has been that the 2011-12 GDP series follows global best practices (meaning, following the latest United Nations System of National Accounts guidelines) and applies better methods using much larger datasets; hence the official estimates are blemish-less. This ignores the fact that India has always followed UN guidelines, and that larger data sets are not necessarily better.
Need for a review
•The proposed change over to a new base-year of 2017-18, is, in principle, a welcome decision. However, considering the methodological disputes and data related questions relating to the current national accounts series, as illustrated above, what would the rebasing potentially accomplish? Doubts will persist so long as the underlying methodological apparatus remains the same; feeding it with up-to-date data is unlikely to improve its quality.
•In view of the problems with the current series, a chorus of academic and public voices has proposed setting up an independent commission of national and international experts to review the GDP methodology. The ideal time to do this would be now so that solutions could be found and incorporated into the new GDP series. Conversely, if a new rebased series is introduced without any changes it will only entrench the existing methodological problems, and ensuring that the debate will continue for the next half decade. And as the debate continues, so will the loss of credibility.
