''INDIA'S GROWING ECONOMY'' : 1 / 2

Prime Minister Narendra Modi of India won re-election in May with what seemed to be rousing  support for his market-oriented economic policies - yet few in India can agree on just how much growth or unemployment occurred in his first term. 

The Indian government's official figures show the economy expanding 7 to 8 percent a year, rivaling or exceeding China since he took office in 2014.

But changes in India's statistical processes, particularly tracking whether jobs were created or lost  under Mr. Modi, have prompted allegations of political interference and questions about data quality.

A new national employment survey was scheduled for release early last year and was to be used to reassess economic growth, but it has been delayed repeatedly, prompting two senior government statisticians to resign in January.

Some of its data was leaked to the Business Standard, an Indian newspaper, showing unemployment at 6.1 percent, more than double previous reports. Labor Ministry surveys from 2011 through 2016 had the jobless rate below 3 percent.

The big question is: Whose data do you trust?

Some economists, particularly in academia, are deeply suspicious of the government’s statistics. “They have politicized this whole data collection process,” said Jayati Ghosh, an economist at Jawaharlal Nehru University in New Delhi. “Nobody believes the numbers anymore.”

At the heart of the debate is a change in statistical methodology that actually has little to do with current politics. 

The change was approved by Mr. Modi's immediate predecessor as prime minister, Manmohan Singh, with strong support from multilateral institutions including the United Nations and International Monetary Fund, which endorsed it as a modernization.

For decades, India had been following a simple approach :

The government counted the quantities of various goods and services being produced. It was a broad simple survey, and the government then used the  estimated prices  for these goods and services to calculate growth.

Countries around the world, including the United States, once used versions of that approach, although industrialized countries mostly abandoned it over the last several decades.

But growth statistics produced by this method are highly dependent on the price estimates. For example, if you are counting cars, you could miss the economic growth that occurs as manufacturers charge more for their cars when they add fancier engines or leather seats.

The new method - which India has adopted and embraced - relies in financial data reported to the government.

The financial results of 900,000 companies incorporated in India are assessed to gauge the country's total economic activity. India is one of the first developing countries to adopt this method.

But some businesses abound in India, and until the past couple of  years they operated almost entirely on cash. This so-called informal economy, including agriculture, represents nearly half of India's  economic output.

The new statistical method assumes that the informal economy will go up and down in parallel to the incorporated companies.

The honor and serving of the latest operational research on developing economies, continues. The World Students Society thanks author and researcher, Keith Bradsher.