In this world of big data, satellite imagery, data analytics and predictive analytics, it is a shame that policymakers have to make decisions based on estimates or incomplete information, because timely, reliable and updates on key economic variables are not readily available.
The exceptions are the Pakistan Bureau of Statistics Population Census (although it took place after 18 years, there has been some controversy over the Sindh data), Ehsaas National Socio-Economic Register , NADRA identity data, PBS price data, SBP payment balance and monetary aggregates, EAD and MOF public debt, PTA telecom data and FBR tax collection .
The National Command Operation Center (NCOC) success story is a prime example of data and evidence-based decision making in the fight against the Covid-19 pandemic. The most deficient area is that of data on real sectors of the economy (agriculture, industry and services) which are obsolete and obsolete, collected on an ad hoc basis and inconsistent with other indirect variables.
In most countries, national accounts are revised about every five years. GDP at current and constant factor prices in Pakistan is always derived from the 2005-06 base, for which some of the surveys were carried out several years before the base year. The 2015-16 rebase exercise has been over for some time and may become redundant due to new capabilities, new activities and new areas that have emerged since the completion of these investigations. Rebasing and extrapolating to the current year would show a substantial increase in the size of the economy, and per capita income would provide a more realistic picture. Of course, the result of the rebasing is likely to cause an uproar in some quarters as it would show lower debt ratios, budget and current account deficits to GDP and lower ratios of taxes, imports and exports, etc. relative to GDP. The current ratios are misleading and do not guide policy makers to take the right corrective measures.
In today’s rapidly changing world, we need high frequency indicators to guide us. Therefore, in addition to the rebasing of national accounts, we need quarterly series as well as annual series, which India has been producing for many years. The process of evaluating and approving the data sets produced by the Pakistan Bureau of Statistics has become too bureaucratic and time consuming and needs to be streamlined. As the provinces have become relatively larger units of economic transactions, we should regularly publish data on the gross provincial product. All the estimates that are circulating (including those that I myself have used) use different assumptions to assign the weights of sectoral value added to the different provinces.
The last economic census took place from April 2003 to December 2003 and published in 2005, the agricultural census in 2010 and the livestock census in 2006. These censuses are essential for estimating intercensal growth rates and also update the samples for the surveys from which the sectoral estimates for agriculture, livestock, micro, small and medium enterprises are derived. The Mouza census was carried out in 2020 but its conclusions are still awaited. How can we have any confidence in the reliability of the current estimates when the underlying universe has changed dramatically during this time, adding new economic activities while others may have disappeared from the scene? Additionally, there is no unified national data center where various databases can be integrated, so there is too much fragmentation and very little aggregation across silos. .
Let me give a specific example of the unreliability and inaccuracy of current data. The Large Scale Manufacturing Quantum Index (QIM) with 2005-06 as the base year gives textiles a weight of 20.9 percent (yarn 13.7 and fabric 7.2). If we look at textile exports, value-added textiles (cordless and fabricless) account for almost 80 percent of total textile exports. Not all large exporting houses producing value-added goods are reflected in this weighting for LSM. So, critics rightly point out how exports increase when yarn and fabric production declines.
The QIM is built on an ad hoc basis by combining data from the Oil Companies Advisory Committee (11 items), the Ministry of Industry and Production (36 items) and provincial offices (65 items) reporting changes on a monthly basis. in the components of the index. Not only is the methodology questionable, but the coverage is also incomplete and inaccurate. Provincial offices – with the exception of the Punjab – lack the capacity to collect primary information and therefore rely on industry sources (which typically underestimate production to evade taxes) or secondary data.
No correlation with input use or electricity or gas consumption is attempted to verify authenticity and the reported raw data enters the index unabashedly. Decisions to export or import sugar were made on the basis of production data provided by the sugar mills, which were subsequently found to be incorrect. The same goes for the output data of cement, fertilizer, automobiles, etc. which are included without validation or independent verification.
The last Census of Manufacturing Industries (CMI) used in the national accounts and the QMI was that of 2005-06. CMI 2015-16 was completed a few years ago and my information from Punjab shows that there is a quantum leap in the index from what we are currently using. The PBS and the Planning Commission should have made the switch, but this has not been done so far. This would affect our national accounts and the industry sector, but also the service sector, the added value of which depends on the quantum of sectors producing raw materials.
The ECC had made decisions on imports and exports of wheat and sugar based on the provincial governments’ crop reporting system and household income and expenditure survey data, but data from production and consumption continued to change from meeting to meeting, as reported in the media. If the PBS can do a good job of rebasing, expanding coverage, and providing urban and rural price indices separately from price statistics and the decision support system, it is curious why this cannot. be done in the case of National Accounts, Labor Survey, Pakistan Living Standard Measurement
The agenda that the PBS should work on in the short term is as follows: first, announce the results of the 2015-16 national accounts rebasing and extend the series to date by keeping the old series in parallel for one year. Second, to organize or complete a new economic census, an agricultural census, a livestock census. Third, immediately publish the results of the CMI 2015-16 Census of Manufacturing Industries and the QIM reconfigured its findings. Fourth, regularly publish quarterly national accounts and gross provincial product accounts. Fifth, redesign and conduct a labor survey including nominal and real wage data each year and its methodology, coverage and definitions aligned with countries in the region. Sixth, the data from the PSLM / HIES survey shows a large gap in income and expenditure compared to the national accounts. Their design, sample size and coverage can be reviewed.