Data lag issues

09 SEP,2019 | MEDC


 

A lag in the release of official data often affects policymaking adversely. For example, if the extent of the slowdown could be gauged beforehand, an interest rate cut of 50 basis points by the RBI would not have seemed excessive. Both investors and policymakers would be better off if they have more timely information to track economic activity, and it is ultimately the government’s responsibility to provide that. Since there are genuine reasons for the lag in the official release of GDP data, the RBI could work out some proxy indicator that could give an interim (and reasonably accurate) sense of the state of the economy. For example, once the current operational issues are resolved, the GST collection has the potential to be a good indicator of nationwide economic activity. This is an important issue needing to be handled carefully, and the RBI probably has the technical capability to act meaningfully on it.

*Photo Credit: Google

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