Kerala Database

Database of the Kerala Economy : 2002 and Beyond

The ISED Perspective

1.0. Introduction

The need for a database in India has changed significantly since the Country entered into the planning era. The need for prompt and relevant data is, undoubtedly, vital for formulation of economic and social policy. But the search for a more relevant and prompt data is never ending. This is because, the demand for data is dependent on several other factors, and these 'other factors' change very frequently. The changes taking place in the world economy are so fast, that the country has to follow them, and an appropriate database equips the planners and policy makers to run faster. Besides, what was highly relevant yesterday, may not be that relevant or even irrelevant today, so that one has to prioritise data collection. This is basically a problem of resource allocation.

2.0. The Demand-Supply Situation

The changes taking place in the world economy and society, and of Kerala in specific, in the first decade of the 21st century, are much more rapid than in the past. Globalisation has much adverse effects on Kerala, though in some sectors it has made positive contributions. However, the challenge of modern times is to quickly adjust to these rapid changes, against the background of the wider objective of social policy in our country. Obviously, hard data, and information emerging therefrom, are vital tools for realistic planning and programme implementation.

As already mentioned, the demand for data is a derived demand. Its demand depends upon something else. Under planning, the so-called 'demand' has to be spelled out by the official planning authority. It is this process, that brings in the concept of 'official statistics'.

The consumers of data are varied. The major consumer is the planning authority itself. The planning authority needs to have a clear view of the economic and social processes, not only of the past, but also of the present. Obviously, these processes need to be captured in the form of numbers, a method which is easily intelligible to the analyst and consumable to the planner. It is these numbers and the results emerging there from, that help the planner to draw up a plan.

But data is also demanded by various data generators themselves. For instance, a company needs data on its competitors, as well as on the market trend for its product. The farmer, though in a crude form, needs data on prices not only in the primary market, but also in the terminal market. While he is often ignorant of the conceptual and methodological aspects of data, his demand is met by the 'market' column of the press and the electronic media.

The supply side also is complex. While, the official statistical system is meant to meet the official demand for data from the planner, there are also several other methods of match-making. The official machinery, which consists of various national level agencies like the CSO , the NSSO etc. have the mandate for large scale collection of primary data, they also collect it from several secondary sources. For instance, the Annual Survey of Industries (ASI), carried out by the CSO, is a rich source of comprehensive data, which are collected directly from individual companies. However, much data which are not covered by the ASI, are available from the Stock Exchange Directory. Similarly, the industry associations and export development councils are important sources of data, which, even the official statistical organisations make use of.

Another informal source of data is the research output brought out by a large number of researchers. Though not a regular source of data on any particular area, they help to have a greater understanding on the official data or to bridge some of the gaps.

Issues relating to data, as outlined above, have attracted the attention of both policy makers and academicians, and hence following the First National Seminar on Database of the Indian Economy, organised in Delhi by the Indian Econometrics Society in 1972, a few such seminars have taken place at the national level, and in the states. Such an exercise was initiated by the State Planning Board at Trivandrum during early 1980s.

3.0. The Historical Context

Most discussions on database concentrate on the adequacy/inadequacy of available data. This is itself implies that the available data were collected in a particular context which has either changed over time, or did not truly reflect the actual need. Chandrashekhar and Tilak (2001) explains this in a context of an interventionist policy regime that was to be implemented within a mixed economy framework with three components:

An effort to alter the commodity composition of domestic production;

An attempt to influence, through allocative and regulatory measures, investment and income; and

The adoption of a range of welfare measures through variables such as unemployment, poverty etc.

Such policy regime required an elaborate database which formed the basis for setting up a strong statistical system. However, an inadequate picture of the possibilities and requirements of the economy was reflected in the data machine also. A process of evolution, involving changes in definition, coverage, and method of construction, were the salient features. During the 1950s, a large number of ad-hoc studies were undertaken on several economic sectors. For example, each State government undertook an average of seven studies on the unregistered industrial sector during this period, in addition to those studies undertaken by the Planning Commission (see, Dandekar and Venkataramaiah, 1975). The link between policy and statistical network was not always positive, and given the growth in the size of the government, this problem was further compounded. New agencies and departments created on a largely ad-hoc basis, started collecting and collating whole new data sets for their own purposes, irrespective of any consideration of complementarity and continuity.

The enhanced ad-hocism in the process of data generation, as outlined above, has its implications on its distribution as well. Information was sometimes selectively released, depending on what it revealed (Chandrashekhar and Tilak, 2001) and most often, data themselves were not collated and kept in a form that could be useful for analysis outside government. While the setting up of a formal structure such as the National Sample Survey Organisation and the Central Statistical Organisation provided greater independence to the planners as well as to the administrative system, in terms of "self sufficiency" in data, the academic discussions began to increasingly hover around these results which, were often dated. Practically, this created a culture of empiricism among academicians which, to a significant extent, stole away the real potential of the academic community in the country. An excursion into academic exercises during the 1970s through 1990s demonstrates a significant imbalance of academic enquiries. While on the one hand, several of the economic sectors and phenomena received substantial academic attention, several other areas remain totally in darkness. And, a reflection of this phenomenon is clear, of late, in the globalisation era of today. While the 'new economy' has become a reality of academic interests and social relevance, academic literature still remains inadequate. The recent changes had three implications on the supply of data. First, new data sets were constantly added to the existing database. Secondly, even with regard to existing data sets, the standard 'data required' changed. Thirdly, the legal and institutional changes, which came along with liberalization, undermined the ability of the government to ensure data availability, even if the data collecting agency wanted to collect it.

Another crucial constraint in the liberalization era is relating to the production of data itself. The official statistical systems in most of the states are significantly handicapped. For instance, the financial constraints of many states have seriously affected their Statistical Department and government often considers collection of statistics as a last priority. This has serious implications on even the survival of these departments.

Though the era of new instruments of technology, such as the CD-Rom and the web, have come to be of great assistance to dissemination of data, the statistical system at the Centre and in the States have not been able to cope up with the rapid changes. The speed of adjustment is much greater than the production of data which, if postponed for a day, may become even useless. Similarly, the working of the economy itself has become too complex that professional expertise should continuously go into a scientific interpretation of such changes on a continuous basis. Thus, a statistical publication brought out by the NSSO or a state level Department of Economics and Statistics, and which is an all-purpose nature, cannot be of much use. Time is so precious today, that one needs to have constituency or sector-based data, which is more intelligible and useable.

4.0. The Limited Approach

Most of the seminars and discussions, mentioned above, had a limited approach to data. Implicit in the concept of data, was such material collected and brought out by the official statistical system. Thus, the discussions on database were largely confined to improving the quality of such official data, as well as to reduce the time lag involved in the collection process. Fortunately, both these problems have been satisfactorily addressed to now. For instance, data collection methods have improved significantly (e.g. extensive use of village maps by the NSSO). Similarly, the use of scanning technology has helped to expedite data processing. For instance, this was used in the Census of the India 2001, and is expected to be used in the Third all-India Census of Small-scale Industries.

In the Conference by the Indian Econometrics Society (1972), the focus of discussion was on improving the quality of field data, as well as issues relating to computerisation. As on today, these problems have become almost redundant. But new problems are again emerging. It is important that these emerging issues are discussed and measures for improvement suggested.

More recently, a live discussion has taken place on India's statistical system, since 1998. Since, the dismantling of the DGTD, the database of the organized industrial sector has been significantly handicapped (Pradhan and Saluja, 1998). Physical quantities of output are compiled only for the items included the index of industrial production. These data, though reliable, do not cover all the units outside the SSI sector. Regarding the SSI sector, on the other hand, annual data are available on key parameters like number of units, production and employment, but are based on a very thin sample study, which significantly erodes its reliability. The follow-up surveys of the Economic Census, and the work being done by the DCSSI go as parallels, with little positive results, and with significant wastage.

It is this finding that is truly reflected in the case of employment data as well. Rath (2001) underlines such wastages in the case of database on employment, unemployment and education. He points out the biased nature of the official statistical system, designing and processing of information. According to Rath, the most appropriate way to find out the extent of rural under employment is to start rural employment works at subsistent wage, on a piece rate basis. Data used to be collected at this level.

Rath (2001), highlights the under utilization of data collected at great cost to the national exchequer, such as Cost of Production Surveys. He also suggests that for particular types of surveys, particular agencies are appropriate, and this will help to reduce cost of data collection significantly.

The trend towards centralization, as outlined above, is clearer in the case of data collected on small industry as well as on the unorganized sector. This situation of the economy as it stands today, and as it has been rightly pointed out by the Tenth Five Year Plan, a significant expansion of the level of employment, with the unorganized sector and small industry as major instruments, are a vitality. But unfortunately, while there are a number of innovative programmes (for example, cluster programmes by various Ministries), these are not based on any clear understanding of the economic and social processes under operation. Naturally, these programmes remain just as administrative exercises with very little effect on employment opportunities.

Globalisation has brought in a much greater element of complexity. A meaningful understanding of trade flows is vital for evolving realistic development strategies in each sector of the economy. This is because the concept of market in the present context implies the international market, and the concept of a local or an insulated market is a myth rather than a reality. Roy (2001) points out that, even if data on trade and production and their prices exist, there is a lack of consistency in this data due to various reasons, ranging from heterogeneity of the sample, to coverage of the data. Therefore, apart from other adjustments in coverage, sample size and survey designs, which can make the database more comprehensive, the harmonisation of data across production, trade and price is necessary.

The decline of the planning era, in essence, means freeing of various actors to provide data to the official statistical machinery on a regular basis. While, furnishing of data under ASI was mandatory under the collection of Statistics Act, the teeth of the Act itself got eroded under liberalization. It is against this background that the recommendations of the National Statistical Commission under the Chairmanship of C. Rangarajan has been widely criticised (Shetty, 2001). One of the criticisms has been that the very purpose of data collection has been reduced into administrative requirements rather than the requirements of broader development objectives. While the limited administrative role of database is highlighted, it is natural that the requirements of the economy are lost sight of. Shetty suggests the case of information, communications and entertainment sector, which is an emerging sector of modern times, which has escaped the attention of the CSO.

5.0. The Globalisation Context

The advent of globalisation has significantly altered the role and relevance of database. While, until recently, the thumb rule of development as well as of the performance of the economy could be set by the government, through its various institutions and policy instruments such as, MRTP, licensing procedures etc. the lifting of these procedures, and the opening up of the economy to the free play of the market forces, brings in an exogenous change to the state of database in the country. While the coverage of data requirements has enhanced significantly, the resources available for generation of data has remained largely stagnant. This implies two things: 1) The official data machinery need to be increasingly cautious about the cost as well as appropriateness of data that has been collected 2) There should also be an enhanced effort to expand the supply linkages of data-base, by which the official data collection institutions and planners should be able to tap the external economies relating to various data sources that are available outside the official system.

6.0. The Question of Relevance

What are the data and information that we should have on a particular sector or activity? The answer to this question cannot be made simply by the State Planning Board or the Directorate of Economics and Statistics. The demand for data arises from our perception on what type of development we want. Therefore, for example, what data should be collected on the IT sector, depends on how we perceive the role and relevance of the IT sector in Kerala's development. If so, we require an interactive process of academics, planners, administrators, businessmen, non-governmental organisations, financial institutions etc., who perceive the IT sector from their own angles. But these perceptions become a full circle of policy, only when realistic data are collected. This is applicable to other sectors of the economy as well.

As per our tradition, planning is simply a technical exercise. In the modern world, it cannot deliver the goods through such an approach. The understanding of the planner need to be increasingly grounded on ground realities. It can come only through an interactive process among people from different traditions and training.

7.0. The Development of Systems

For quite sometime, there has been arguments in favour of improving the database of the economy, both at the national level and in Kerala. However, such discussions have not yet been translated into action significantly. There are several bottlenecks, such as departmentalism in the government, the communication gap on the supply and demand sides etc. For example, The Arun Ghosh Committee recommended a greater co-ordination of the activities of the NSSO and the DC (SSI), relating to database on small industry. Unfortunately, even in some areas where co-ordination is possible, it has not taken off the ground. Besides, much of the data collected at the national level by the DC (SSI), remains unprocessed at the state level. Such issues are relevant in the case of many other sectors of the economy as well.

A constituency focus on database is likely to be a more meaningful starting point for generating relevant data. For insatance, if small industry is a constituency, one needs to assure supply of adequate data on various functional areas of this sub-sector of the economy. The data collected then becomes a matter of compulsion rather than one of convenience.

8.0. The Kerala Relevance

Kerala has a much better official database in the whole country. But the inadequacies of this database are substantial. While the coverage is much higher than that of other states, the State does not have adequate database on some crucial sectors of developmental importance, such as tourism, information technology etc. It is this mismatch in data, which raises fundamental questions on the very concept of a database from the point of view of development. While we need a database, which covers the various aspects of the economy and society to a significant extent, we also need to increasingly focus on the demand aspect of a database. It is this perspective that should guide creation of a database through various methods.

At the practical level, the question before us need to be examined on the following lines. The whole exercise of annual Budget preparation requires a clear understanding of the performance of the economy over the past one year. The preparation in this context is set in motion by October every year, such that the annual Economic Review is ready by February. The importance of this vital document is two-fold. Besides being an economic document which guide the budgetary exercise, it is also an important political instrument which reflects the economic and political wisdom of the Government in power to be presented in the Legislative Assembly. Therefore, the document, by no means, can be an ad-hoc one, it need to be based on realistic data on the performance of the economy.

But how are such vital data, which forms the backbone of the Economic Review collected? The Government has a statistical arm called the Department of Economics and Statistics, which is expected to have the expertise relating to collection and interpretation of data. The State Planning Board is expected to be just a consumer of official data which, in principle, should come through the Department of Economics and Statistics. However, we have not yet been able to streamline this complete system in terms of efficiency and quality such that the whole annual exercise is performed effectively on the above lines. Naturally, the State Planning Board depends directly on the various departments of the government for its data requirements. Though it gets access to some such data, the Board does not get them in right time, nor does it have adequate expertise to fill in the vacuum, if any, within the limited time at its disposal. Naturally, this handicaps the whole process. The same applies in the case of Plan formulation also. While planning is a political process which should truly reflect the political aspiration of the people, there is often, a mismatch between the political content of the Plan document and its economics. A major contributor of this mismatch is the database itself. The Plan objective and strategy are often laid down, based on an imperfect understanding of the economy as a whole and of particular sectors. But of course, the process of Plan preparation is time bound. On the other hand, the official data system which should take care of this imperative, practically fail in its mission of providing relevant data which suits the overall Plan priorities to be worked out.

9.0. The Question of Adequacy

The above discussion leads us to the question of adequacy of data. What is an adequate database? The question of adequacy has to be addressed at two levels: 1) at the level of output: and 2) at the institutional level.

At the level of output, we need to have some criteria for evaluation of adequacy of the existing database:

An evaluation of the concept of data requirements in each sector: This should emerge out of some continuous exercise of data needs analysis. Such a needs analysis should be initiated by the State Planning Board, in cooperation with reputed academic institutions (the Conference initiated jointly by the State Planning Board and ISED, is an example).

If available data is not adequate as per our adequacy norm as above, we need to raise the question, why? Is it because of exogenous or endogenous factors? How can these factors be corrected within a timeframe?

If data is not adequate, who will collect it and in what timeframe?
In what form data will be made available, and to what extent the availability will be assured? Will it go on Internet? Will it be published in a book form? Will it be priced or not? These things should be made clear to one and all.

10.0. Conclusion

Kerala cannot afford anymore, the conventional strategies of data collection and dissemination. It need to restructure and reorient the existing system on the basis of clear definition and priorities of the role of various relevant actors. Collection of data without a clear purpose means putting the cart before the horse. This is applicable to the statistical system as well as to research outside the government.

Bibliography

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