- Modi 2.0 presents a new window of opportunity to usher in some fundamental reforms for the Indian economy. A modern dynamic economy requires a robust statistical system to provide precise and real time estimates of several critical indicators.
- One of these is unemployment — which has been at the heart of prolonged acrimonious public debate in India for several years. Now is the time to move beyond the politics of unemployment to the real and pressing issue of measurement of unemployment.
- Measurement of economic indicators, for example the unemployment rate, is an apolitical issue that requires statistical expertise of the highest standards.
Before the release of any figure, it is imperative to discuss, debate and deliberate the methodological issues around the measurement.
For example, to measure the unemployment rate, it is practically impossible to conduct a periodic census of all citizens above 15 years. Therefore, we have to rely on the second-best option of conducting sample surveys, and the natural question is then about the size of the sample survey.
Therefore, there can be no credible discussion on changes in unemployment from one period to another in the absence of a paper that outlines in detail the underlying sampling methodology.
- Even if the sample size issue is addressed to minimise what statisticians call sampling errors (the sample size might not be large enough to address the question of interest), there are issues relating to non-sampling errors.
For example, suppose there is a job boom in the economy and the employed overwhelmingly refuse to participate in such surveys or do not answer all questions, then it is possible for the survey to indicate high unemployment. Therefore, non-participation is an important issue and methodological rigour requires for a survey to have transparent strategies to prevent or minimise these errors.
- Having local and real time socio-economic indicators:
India is a large, complex and diverse economy that is undergoing structural transformation. Hence, we are moving towards precision policy-making which requires local and real time socio-economic indicators.
The nature and incidence of unemployment, for example, differs from state to state. This requires local measures of unemployment so that economic policies can be tailored depending on local conditions.
For instance, unemployment is a rural phenomenon in several states, while in others it is concentrated in urban areas.
- Involving state governments:
The state governments will have to participate along with the central government to have comparable uniform measures of periodic unemployment.
Unfortunately, at present, several state governments do not have the capacity to conduct regular surveys. Robust statistical systems will require that we begin to create such local capabilities urgently. It is time to move beyond one-size-fits-all solutions to more inclusive solutions that take into account local conditions.
Any figure should be accompanied with a wise and reasoned account of its liability to systematic and fluctuating errors. For a figure as important as the employment-unemployment data, which is to serve as the basis of many important decision, the accompanying account becomes important than the figure itself.