2 years ago

Data deception weakens policies

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The average per capita income in Bangladesh was US$ 1,909 at the start of 2019-20 fiscal-year. Later, Bangladesh Bureau of Statistics (BBS) informed on August 11, 2020 that the per capita income had risen to US$ 2,064 in line with a GDP growth rate of 5.24 per cent during that fiscal-year. After that, the per capita income was shown to be US$ 2,227 at the end of 2020-21, which was followed by another BBS claim in November 2021 that the figure had crossed US$ 2,500. And according to the latest estimates of BBS, the per capita income rose by USD 327 to stand at US$ 2,554 at the end of 2021-22 fiscal-year. But this latest figure has not been the finding of any new survey or improvement in economic indices. Rather, it is mainly an outcome of changing the base year for calculation of GDP from the previous 2005-06 to the newly-set 2015-16 with effect from 2020-2021.

According to many economists, the BBS does not properly take into account the negative impact of inflation while calculating national income, labour income, household income etc. Besides, the GDP and per capita income can also be inflated by showing lesser population, as GDP has to be divided by population for arriving at per capita income figures. Whereas most observers including development partners opine that the country's population is over 180 million now, the BBS shows it to be 163 million. As there has not been any population census in the country since 2011, the actual population as well as population growth rate of Bangladesh appears to be ambiguous and BBS has not done anything concrete to allay the suspicions. As in the past, its principled position appears to be satisfying the whims of relevant authorities or pleasing them with bloated figures instead of acting as truth-seekers with regard to socio-economic data of the country.

Estimation of national income accounts in Bangladesh is one of the core functions of 'Bangladesh Bureau of Statistics' (BBS). Initially, national income accounting was a joint activity of BBS and Planning Commission. Since 1975, BBS has been engaged in calculating national accounts entirely on its own. It started compiling and publishing GDP and other national income accounting aggregates in 1972 by following production and expenditure approaches in line with the concepts and classifications of the 1968 UN System of National Accounts (SNA-1968). The fiscal-year 1972-73 was used as the base year for constant price estimates until 1988-89. The base year was then changed to 1984-85 in 1988-89; 1995-96 in 2000; and lastly 2005-06 in 2013 by adhering to the stipulations of SNA-1993.

Now, 2015-16 is being used as the new base-year with effect from July 2020 by following the latest system of national accounting (SNA-2008). As a result, the number of sectors measured has jumped to 24 from the previous 15, thereby expanding the scope of GDP. The new sectors are: mobile and agent banking; dairy and poultry farming; nurseries; latkon-dragonfruit-strawberry, capsicum and mushroom; housing; cable television; internet; and helicopter service. But many observers have challenged BBS by claiming that these sectors were already taken into account in the past in one form or another under sectors like banking, agriculture and industries. Consequently, no direct linkage can be logically established between the changes in base-year for GDP calculation and its large-scale boom. 

Economists also complain about the method adopted by BBS for CPI (consumer price index)-based calculation of inflation. There are allegations that the annual average inflation rate is shown to be less by undertaking surveys at opportune moments when produced crops are harvested or there is lesser food inflation. Besides, the household income is also shown to be more as inflation is not deducted. Moreover, non-food inflation is allegedly shown to be less in years when the food inflation becomes excessive.

Criticisms have often come by the country's leading think-tanks regarding the system of GDP measurement in Bangladesh as well as its credibility. Questions were raised about the quality of GDP statistics during a discussion held at Bangladesh Institute of Development Studies (BIDS) in 2019-20. GDP growth rate can be judged or evaluated from two perspectives. One is income inequality, which is constantly getting worse in Bangladesh as revealed by official data. The other is employment, which has not improved despite claims of high growth rate. A similar analysis made by the South Asian Network on Economic Modelling (SANEM) claimed there was lack of consistency between remittances and high growth. The high industrial growth as shown by official GDP figures also did not match with the figures for private investments. Besides, the gradual decline in incremental capital output ratio also raises questions, as Bangladesh ranks very poorly in the global cost of doing business chart.

A previous analysis by the Centre for Policy Dialogue showed that despite claims of high growth rate, commensurate contributions to GDP by relevant sectors were not being observed. As there have not been sufficient investments against high growth, the labour productivity should have risen. But no technological or innovative transformation has taken place in Bangladesh in recent times that could enhance the productivity radically. The workers' income should also have increased in case of productivity improvement. But even official data show the reverse to be true. The GDP shown by BBS has not at all been realistic in recent times and CPD sought explanation from BBS on how GDP was being calculated.

This controversy surrounding GDP in Bangladesh had especially become acute during the previous decade in the wake of worsening democratic deficits in the country. For example, the growth in agriculture sector was negative and the remittances also decreased in 2015-16, but the growth rate was shown to be 7.11 per cent. The growth rate was again shown to be 7.28 per cent in 2016-17, but the remittances had decreased by over 14 per cent and the export growth was marginally above 1 per cent. The growth rate was then shown to be 7.86 per cent in 2017-18 following initial projection of 7.65 per cent despite negligible increases in productive capacity, investment and employment. 

The GDP data claimed by BBS have not been realistic even in recent times, as evident from the provisional figures for 2019-20 that showed a growth of 5.24 per cent amid the Covid-19 pandemic. The whole country was under an informal lockdown (general holiday) from March 26 to May 39, and mostly the garments factories were opened in the manufacturing sector in June. Besides, the hotels and restaurants, construction and transport sectors by and large remained closed during the March-June quarter. But instead of showing a negative growth, the manufacturing, construction, hotels & restaurants, and transport, storage & communication sectors (accounting for 44 per cent of GDP) were shown by BBS to have recorded growth rates of 5.48 per cent. 9.06 per cent per cent, 6.46 per cent and 6.19 per cent respectively. These figures also contradicted significant declines in two other indicators, viz. exports and revenue collection, which are usually positively correlated to GDP. Besides, BBS itself claimed that there had been 82 per cent fall in manufacturing output during April 2020, which was most likely to hold true for May as well because of the general holiday. Ultimately, BBS had to concede its lapses when the final GDP growth rate figure for 2019-20 was shown to be 3.51 per cent. 

The country's leading economists have all along raised questions about the authenticity of GDP figures provisionally announced by BBS, even claiming that growth rate figures have now assumed the shape of a political number. A CPD executive director had commented in the past, "A kind of infatuation appears to have grown among the country's policy-makers regarding growth. Growth data are therefore being used politically. Exaggerating growth cannot be beneficial; it does not help policy-making". Even a former secretary of the statistics division claimed at a citizens' dialogue in 2019 that she had seen how development-related statistics were polished or doctored during her tenure. The problem becomes even more acute when an authoritarian regime tries to paint a rosy picture of the economy in an attempt to hide its democratic deficits. 

It is sad that Bangladesh has not yet been able to develop a credible statistical system even after 50 years of existence. This lack of credibility of statistical methods needs to be addressed swiftly. There should be a transparent dialogue on the subject by involving all stakeholders, in addition to streamlining the statistical system. Otherwise, the real picture of the country's socio-economic growth can never be gauged properly, which in turn proves to be a hindrance to adopting development policies and programmes and undertaking policy analysis in a realistic and logical manner.

Dr. Helal Uddin Ahmed is a retired Additional Secretary and former Editor of Bangladesh Quarterly. [email protected]

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