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4) Estimating economic activity is never going to be an easy task in an economy that has poor data standards. Examine.(250 words)

Topic– Indian economy : issues

4) Estimating economic activity is never going to be an easy task in an economy that has poor data standards. Examine.(250 words)


Why this question

Off late several economy related statistics have presented conflicting viewpoints which makes it difficult to gauge the performance of the economy and also leads to other issues. The article examines these issues and highlights the need of improvement of statistical methodology in the country.

Key demand of the question

The question expects us to bring out the problems associated with estimating economic activity in India because of the varying pictures presented by the data. We need explain the issues involved and highlight the impact of such data uncertainty on policy making and economy.

Directive word

Examine – When you are asked to examine, you have to probe deeper into the topic,  get into details, and find out the causes or implications if any.

Structure of the answer

Introduction – Highlight why this issue is in news. Also mention that India thanks to mahalanobis had built a statistical system that was once the envy of the world.


  • Explain why does the question say that India has poor data standards. Here we need to talk about the controversy related to employment data statistics, GDP data etc
  • Discuss the issues with data standards of the country
    • How surveys are designed and questions are developed has evolved into a science that transcends the skill set usually employed by our statistical systems.
    • We decided to adopt international standards developed for industrial societies where self-employed farmers and shopkeepers have been swallowed up by large corporations. In India, the socio economic realities are vastly different.
    • data collection is increasingly being done by contractual employees and for-profit organisations. Supervising them and ensuring their honesty remains challenging. While improved technology for monitoring fieldwork such as random segment audio recording of interviews and real-time checks for detecting frauds and errors may help increase honesty, there is no substitute for empathy and experience
  • Discuss the impact of poor data standards on economy and policy making such as on setting interest rates based on inflation data etc
  • Discuss the way forward – finalizing the draft national policy on official statistics etc

Conclusion – Give your view on the importance of accurate data standards and what needs to be done.