The devil is in the data

Dec 11 2013, 03:17 IST
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SummaryTo fight food inflation you will not only need small samples on output but also demand levels and changes of individual crops

As the agriculture and food economy move on to the fast-track information and statistics get the spotlight both for the needs of public policy and private investment and market functioning, the concepts like small samples, on farm physical investment, agricultural sectoral terms of trade, arrivals and surpluses, quality differentials get to the fore. One would have thought that agriculture would mean simplicity in statistics. Not so. When a sector is a part of a larger entity, life gets more complicated, since the interaction between the two becomes a further issue. The National Statistical Commission Committee on Agriculture that I chaired, therefore, begins with terms of trade of agriculture with the rest and inter-sectoral surpluses starting with the work of KN Raj, then me, Sudipto Mundle, Ashoka Mody ending with the recent estimates of BB Bhattacharya. When you get out of the comfortable world of rice and wheat and get into pulses, vegetables, fruits, spices, milk, eggs, chicken, fish and meat, you get into the world of small samples. India has a long tradition of small sample theoretical and estimation work, and the Indian Agricultural Statistics Research Institute and its pioneer Professor Panse cannot be ignored and will be if it is agreed to spearhead the creation of an information base here.

A lot of work will be needed since these are the crops that are at the root of what is called food inflation, which apart from policy failures is the only thing that will hold back India from a 7%-plus annual growth rate.

To fight food inflation you will not only need small samples on output but also demand levels and changes of individual crops, with tree crops and in vegetables, fruits and forest products and non-crop based commodities like milk etc in annual time. That is, in fact, more complicated and at present we measure demand only in NSS quinquennium years and interpolate in intervening years. Interpolated data are no use to understand fluctuations and develop policies. And so demand data will have to be presented annually and prices tracked as it were on a real-time basis. The committee has made detailed recommendations on this complicated issue and suggested annual surveys.

There is a lot of confusion on agricultural markets. The committee has defined agricultural markets and suggested that if such market purchase sale behaviour is seen then every year data on such transactional outcomes for agricultural outcomes in summary form

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