Being broke is statistically fine for Mamata's Bengal govt

The most mathematically-challenged state government in the country is rescued by bad statistical analysis from a world-renowned think-tank


Kajal Basu | January 3, 2013

Mamata Banerjee: The employment growth of 1,00,000 being tom-tommed by the West Bengal chief minister since her ascension are a mix of phantom jobs and very short-term dehadi jobs in the non-taxable, lowest-consumption bracket.
Mamata Banerjee: The employment growth of 1,00,000 being tom-tommed by the West Bengal chief minister since her ascension are a mix of phantom jobs and very short-term dehadi jobs in the non-taxable, lowest-consumption bracket.

There’s been a reinvigorating flutter in the Trinamool Congress head office lately — a remarkable change in spirits after all the (local and national) flak it has been catching for more than a year now. And it’s all because the much-respected Brookings Institution, a US think-tank that has almost 100 years of profundity behind it, and the weekly newsmagazine India Today recently gave West Bengal an unequivocal huzzah for galloping economic and social progress during fiscal 2011-12.

According to Brookings, “Kolkata has fully recovered from a minor recession. It is a pocket of growth in India, outperforming the country on recent changes in both employment and GDP per capita while experiencing positive growth on both measures.” (Words in bold by Brookings)
Brookings Global MetroMonitor 2012: Slowdown, Recovery, and Interdependence, released on November 30, 2012, ranked West Bengal’s economic performance ranking at a sparkling 24 (from the 300 metropolitan economies surveyed worldwide for this report) — up from a dismal 73 in 1993-2007 and a horrendous 86 in 2007-11. The report says that in West Bengal, the GDP per capita has gone up (relative to its previous survey in 2007-11) by 5.4 percent; and that employment has increased by 2.6 percent.

Meanwhile, Delhi’s economic performance ranking dropped from fourth in 2007-11 to 13 in 2012, but, interestingly, its GDP per capita went up by 4 percent to form a layer of cream over the GDP per capita growth of 8.7 percent relative to 1993-2007. Mumbai’s GDP per capita went up by 4.5 percent and its employment by 2.5 percent; Chennai’s GDP/pc went up by 5.1 percent and its employment by 1.6 percent; Bangalore’s GDP/pc went up by 4.4 percent and its employment by a meagre 0.1 percent (even as its economic performance ranking dropped to a seemingly appalling 139 from a pretty bad 69 in 2007-11 and a stunningly appalling 256 in 1993-2007); and Hyderabad’s GDP/pc rose by 3.7 percent and its employment by 0.7 percent. Brookings’ optimism about the most underperforming and financially-broke state in the nation today is put in perspective by its belief that Delhi, Mumbai and Hyderabad had suffered “no recession”.

Brookings set the West Bengal per capita GDP at US$3,127 — which falls between ‘substantially less’ and ‘a little less’ than the other Indian cities surveyed: Delhi ($9,499), Mumbai ($5,947), Chennai ($4,902), Bangalore ($3,963), and Hyderabad ($4,065).
Overall, therefore, Kolkata seems to be the king (or queen) of the roost — and yet not an iota of Brookings gung-ho is evident on the ground. Not — to put it in terms that Brookings can understand — a cent’s worth. And that really is no surprise, because Brookings botched up — very badly — in Global MetroMonitor 2012. It chose to read into the statistics a sunny optimism that is entirely divorced both political context and partly divorced from the cautionary findings of the previous survey: the long-winded The Path to Economic Recovery: A Preliminary Overview of 150 Global Economies in the Wake of the Great Recession — dated December 2010.

(For example, the employment growth in 2012 of 2.6 percent just about manages to offset and creep past the employment ‘negative growth’ of -2.5 percent during the previous survey. Had Brookings elected to broaden their data-inclusivity, it might have found that the employment growth of 1,00,000 being tom-tommed by West Bengal chief minister Mamata Banerjee since her ascension are a mix of phantom jobs and very short-term dehadi jobs in the non-taxable, lowest-consumption bracket that Trinamool mofussil leaders have got for their vote-bank through the delicate art of arm-twisting ancillary good manufacturers, whose monitoring the state government has left to its MLAs and sundry youth and union leaders. These heady numbers are mentioned in the Trinamool’s promotional handouts, but are missing from the state government’s registers — which, although technically open to the public, can be seen only with the clandestine help of bureaucrats tired of this rubbish.)

Brookings’ methodology for this survey is a mystery, for neither of its two data-compilers/analysts hit the ground running — or hit the ground at all. First, both work in Brookings’ Metropolitan Policy Program, the core competence of which is “[r]edefining the challenges facing metropolitan America and promoting innovative solutions to help communities grow in more inclusive, competitive, and sustainable ways”, which pretty much falls in line with the “three broad goals” of Brookings: 1) “Strengthen American democracy”; 2) “Foster the economic and social welfare, security and opportunity of all Americans”; 3) “Secure a more open, safe, prosperous and cooperative international system” (italics mine).
Second, the report is tailor-made for those razzing the system of macroeconomic analysis — as Mamata Banerjee is — by defining parameters in Brookings’ own liberal terms (and I use ‘liberal’ in the American, not the British/Indian English sense): The report defines ‘Employment’, for instance, “the number of people who performed any work at all in the reference period, for pay or in-kind, or who were temporarily absent from a job for such reasons as illness, maternity or parental leave, holiday, training, or industrial dispute”. Also, Brookings’ definition of Minor recession, full recovery—decline in either GDP per capita or employment (but not both) in at least one year from 2007 to 2011, but recovered to previous peak by 2012 — isn’t applicable to West Bengal, however you want to spin it.

This ‘work is whatever you do whenever you do it for whomever you do it’ waffling validates the opening of Pandora’s box of iffy statistics — and the mathematically-challenged Mamata Banerjee government, as has been pointed out earlier in this column, has made full use of broad-stroke numerical phraseology to plug whatever it is that they haven’t done — which is pretty much everything.

Moreover, neither of the two credited with this report — especially with respect to the Asia Pacific section — carries the heft of, say, Nayan Chanda, Director of Publications at the Yale Center for the Study of Globalization and one of the leading Asia Pacific region experts at Brookings. Emilia Istrate is an associate fellow/senior research associate and Carey Ann Nadeau, a senior research assistant at Brookings’ Metropolitan Research Program, which has its eyes firmly fixed on “improving the health and prosperity of cities and metropolitan areas” and “component cities, suburbs, and rural areas” — in the US. All considerations are enslaved to this purpose, which is hardly condemnable in a more equitable world but has its drawbacks in a globalised one — especially where the ‘improver’ of health and security must necessarily play the role of the succubus. Their sources were Oxford Economics (which provides the data and provides quantitative analyses), Moody’s Analytics and the US Census Bureau.

I wouldn’t have a major problem with the issue of data-sourcing if it weren’t for the fact that eggheads far from the impact zone make for terrible dependability. Oxford Economics, founded as far back as 1981, employs just “70 people in Oxford, London, Belfast, New York, Philadelphia, UAE and Singapore” — and none at all in the subcontinent, in which Global MetroMonitor 2012 surveyed only six cities, all in India and all “outperforming the rest of India”, but in which it found Bangalore, of all places, with a middling economic performance ranking (while Kolkata was, in percentage terms, the “strongest”). Moody’s Analytics, on its part, made one of those if-or-when predictions that don’t need the brain fuel of forecasters — that Trinamool’s vote of no confidence “may turn out well for the government. If the motion succeeds, parliament will dissolve, triggering an early election and a new government probably led by the BJP. But if the motion fails, as seems likely, it could help fortify the government’s position at the expense of the Trinamool’s obstinate but effective leader, Mamata Banerjee.” And the US Census Bureau is known as the most efficient flycatcher in human history: throw a gobbet of information at it, however specious, and it will process it and fit it into a country profile.

Topping it all, the Global MetroMonitor 2012 was funded in its entirety by the $2.2-trillion JPMorgan Chase & Co, the largest bank in the US, leading the four-bank conga line of Bank of America, Citigroup and Wells Fargo. JPMorgan Chase & Co, in its earlier incarnation as JPMorgan Chase Bank, has been in India, in one form or another, since the 1930s, and knows how the system here works. The previous Global MetroMonitor had less disputable funding — from Deutsche Bank’s Alfred Herrhausen Society — and its data sources — LSE Cities, the London School of Economics and Political Science, and Deutsche Bank Research — have less to gain from the data they process and disseminate.

It’s a bit tough to swallow the idiocies of macroeconomic analyses done by the gnomes of greenbacks who might be complementarily educated by a simple walk through the target topography. Even by Brookings, which, according to Foreign Policy’s Think Tank Index 2009, was “driving the conversation” in Washington.

And here’s the rub: where Kolkata, Bangalore, Chennai and Hyderabad are concerned, the ‘Industrial structure: Share of metro area output by industry (2012)’ graphic on the Brookings website announces: “Data not available.” And that is, well, sort of interesting. If they didn’t have this data, or had it but haven’t got it perfectly sorted and stacked and analysed, how did Brookings arrive at its findings?

I’d tell Brookings if I could: “You tell me.” With an eye on the panchayat elections, Mamata Banerjee announced 1,00,000 jobs (I hope that announcement didn’t feed the employment stats in the Brookings report).  She has ‘announced’ grants of '2 lakh each to 700 local-level clubs. She ‘announced’ a 400 percent increase in allowances to block-level officials. (Expense on account of salaries, a major portion of the state’s expenditure, is projected to shoot up from '28,899 crore to '31,184 crore this fiscal. Expenditure on pension and other retirement benefits will increase from '8,385 crore to '9,582 crore.) In 2011-12, West Bengal ignored the original borrowing limit of '17,828 crore and took market loans of more than '20,000 crore. Banerjee’s government went in for the leeway provided in the Fiscal Responsibility and Budget Management Act—twice in one year. And she refused to do the bright thing and increase the base VAT from four to five percent, which is what most states have done.

Meanwhile, come January, West Bengal state officials might have to wait for their salaries (no deadline for salary payment is in the grapevine) because the government is out of cash. There has long been no cash in hand to pay low-level officials—constables, border guards, forest rangers—and they are doing what they must do to make ends meet.

The projection of West Bengal’s debt by the end of this fiscal is '2.26 lakh crore, which is almost 39 percent of debt to gross state domestic product (GSDP) ratio—which makes it the most indebted state in India.And we have Brookings informing us that the state is soaring.




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