Pronab Sen

By Meghna Mittal,

New Delhi, (IANS) : With the 2016-17 GDP numbers clearly reflecting that demonetisation took a toll on the Indian economy, its effect on the unorganised sector that was most hit by the cash crunch is expected to be far worse, says India’s former chief statistician Pronab Sen.

The 7.1 per cent GDP figure does not take into account any direct impact on the unorganised sector, and by the time the first estimates on the unorganised sector come in by 2018-end, demonetisation will be history, he says.

“Demonetisation effect has been primarily on the unorganised sector, and you are not going to get any figure on the unorganised sector at least till the end of next year. The data doesn’t exist at the moment,” Sen, who is currently the country director at the International Growth Centre, told IANS.

He said the basic problem continued to be that in any quarter there was no assessment at all of the unorganised sector. “That’s not changing. The earliest you would know and have some indication is when the Annual Survey of Industries (ASI) data comes in, which is going to be 2018-end. Before that you will have no idea,” he said.

He said the Central Statistics Office (CSO) used essentially organised sector data to approximate what was happening in the unorganised sector.

“The direct measure of unorganised sector we get is only once in every five years. In the interim, for the manufacturing sector, what is used is the Index of Industrial Production (IIP). But the IIP does not directly measure the unorganised sector. It only measures larger registered units, employing more than 10 people,” he said.

“You cannot estimate unorganised sector through IIP where companies are sending their production data on a regular basis,” he added.

Sen noted that the country does not have a system of getting a more regular data on the unorganised sector and ASI data is the earliest that we will get some estimate of the impact.

“There will be some indication. When you get ASI data, then you can actually select smaller companies which are more similar to the unorganised sector and evaluate how they have performed. It’s a proxy, but it’s a better proxy than IIP, which uses the data of the largest companies. The closest approximation we will get is from ASI,” he said.

The direct measure of the unorganised sector, the National Sample Survey Office (NSSO) Enterprise Survey by the Ministry of Statistics and Programme Implementation (MOSPI) comes out only once in every five years.

“You get the Enterprise Survey data on the unorganised data by MOSPI once in five years. You won’t know the impact of demonetisation because in between three years would have passed. So we will never really know what happened in demonetisation,” he said.

NSSO’s date of the surveys are fixed in advance, which cannot be altered for demonetisatin, Sen noted.

“The only way you are going to get data on the unorganised sector is through surveys. Surveys take time,” he added.

“Demonetisation is history. We are talking now about how to evaluate that episode. This is now at the moment of historical importance. Even from the Reserve Bank of India (RBI) side, you are not going to get anything,” Sen said.

The data on the total amount of cash deposited in old notes during demonetisation is still awaited from RBI.

(Meghna Mittal can be reached at meghna.m@ians.in)