India's dodgy industrial statistics

Bloomberg's Andy Mukherjee explains that in India, Industrial Growth Is One Part Hair Oil:

India is undergoing a hair-care revolution that makes up as much as a tenth of the country's industrial growth this year, apparently because Indians are lubricating their scalps like never before with hair oil.

If you believe that, then maybe you should consider production of pens, which generated almost half of India's gain in manufacturing, mining and electricity-producing industries in October 2004 -- all in the absence of signs that India has become a nation of scriveners.

Monthly hair-oil production, according to the central statistical office, has risen 14-fold in two years to 2.1 million liters in May. ...So what's going on in the hair-oil production statistics?

Official data is ``way off from the actual underlying trend,'' say Morgan Stanley economists Chetan Ahya and Mihir Sheth in Mumbai. Statistical blunders are causing a minor category -- hair oil makes up just 0.3 percent of the country's industrial production index -- to account for 10 percent of output growth.

It's a serious lapse. The production index claims to present a snapshot of industrial activity, which accounts for a quarter of the $692 billion Indian economy.  ...The data becomes meaningless -- even misleading -- for investors and analysts.

Investors and economic policy makers need timely, accurate and reliable statistics. If other major economic indicators are as dodgy as this, that would be a serious concern.

Comments

[Erwan]

must we understand that hair oil business was snake oil?

[Edward Hugh]

Glad to see you're picking up on Andy, I normally think he's worth the read.

I posted on another of these articles of his here:

http://bonoboathome.blogspot.com/2005/07/shampoo-economy.html

The shampoo economy.

[Vikram]

I wrote a note on a related subject at

http://www.livejournal.com/users/true_it_is/10082.html