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The NCAER 2019-20 Mid-Year Review of the Indian Economy

NCAER presented the 2019-20 Mid-Year Review of the Indian Economy on November 16, 2019 in cooperation with the India International Centre (IIC). NCAER macro team led by NCAER Distinguished Fellow Sudipto Mundle presented its latest analysis of the economic situation and its growth forecasts to an audience of policy makers, policy commentators, and the business media.

The NCAER Mid-Year Review (MYR) carries on the tradition started by Malcolm Adisheshiah at the IIC in 1976. Dr Adiseshiah, one of India’s most distinguished economists and educationists, a Life Trustee of IIC, recipient of the Padma Bhushan, and founder of the Madras Institute of Development Studies, was a key architect of UNESCO’s work on education and technical assistance. The MYR 2019 came at a time of heightened concern about a serious slowdown of the Indian economy, with both cyclical and structural factors coming together at a time when fiscal and monetary policy appear to have limited headroom to tackle the slowdown.

Bornali Bhandari, NCAER presented the Performance of the Real Economy and Trade and Sudipto Mundle discussed the Macroeceonomic policies. A Panel Discussion on Balancing Macrostability and Deeper Structural Reforms for a Growth Recovery was moderated by Pronab Sen, IGC.

The highlights of the report are as follows:

NCAER nowcast the GVA growth for Q2:2019–20 at 4.9 per cent (± 0.81 per cent).  It has also forecast the annual GDP growth for the whole year 2019–20 at 4.9 per cent (± 1.04 per cent). The Q2:2019–20 nowcast and the annual 2019–20 growth forecast has been arrived at by a joint NCAER-NIPFP modeling team. This presentation of the Mid-Year Review (MYR) of the Indian economy, is part of a long-standing partnership with the India International Centre.

Farm sector looks up 

Weakening economic growth has been cushioned somewhat by its the positive trend in agricultural production. Indian agriculture is still heavily dependent on the monsoon and, despite its late arrival, rainfall this year has been normal, as predicted in the forecasts of the India Meteorological Department (IMD). NCAER estimates the output of kharif foodgrains to be in the region of 149.1 million tonnes, which indicates an increase over last year’s record output of 141.7 million tonnes. The expected increase in output is attributable to the strong performance of all the three crop groups, viz., rice, coarse cereals, and pulses.  The estimates are based on area-weighted rainfall though they may be subject to adjustments because of abnormal rains in many parts of the country which may affect crops and crop quality.  The current year’s water storage in dams as on October 24, 2019 was 127 per cent of the long-term average, also pointing to an encouraging outlook for the rabi season.

Industry dips 

The industrial sector outlook is grim. The figures show that in Q1 2019–20, growth of all the industrial sectors declined barring ‘electricity, gas, water supply and utility services’. In Q2: 2019–20, the Index of Industrial Production (IIP) showed a year-on-year (y-o-y) decline in growth of (–) 0.4 per cent as compared to growth of 5.3 per cent in Q2: 2018–19. The three major components of IIP, that is, mining, manufacturing, and electricity, showed growth rates of (–) 1.2 per cent, (–) 0.4 per cent, and 0.4 per cent, respectively in Q2: 2019–20 compared to the corresponding rates of 0.9 per cent, 5.6 per cent, and 7.5 per cent in Q1: 2018–19.

Goods & services collectively hit 

Capital goods showed negative growth for nine months in 2019, with this slowdown deepening further in August and September 2019. The capital goods IIP grew at (–) 21.4 per cent and 20.7 per cent, respectively. The consumer durables IIP has registered negative growth since June 2019. In September 2019, the growth in IIP of consumer non-durables also slipped into negative territory. Thus, the overall outlook for the industrial sector remains gloomy due to weak demand and investment activities. The Nikkei Purchasers Managers Index fell to 50.6 in October 2019.

In the services sector, the indicators available for Q2: 2019–20 point to a decline in the growth of most services. The decline in railways cargo traffic, international air cargo traffic, and cargo handled at major ports, taken together, is indicative of a general decline in the level of economic activity during Q2: 2019–20. In line with this observed pattern during Q2: 2019–20, the Nikkei Purchase Managers Index (PMI) was also below 50 during both September and October 2019.

Retail inflation as measured by changes in Consumer Price Index (CPI) has gone up in September and October 2019, largely driven by a rise in the price of vegetables.  However, inflation of other retail prices and wholesale prices as well as core inflation (non-food and non-fuel) have been softening.

Marginal growth in exports 

On the external front, India’s total exports, including merchandise and services, is estimated to be worth US$ 267.2 billion for the first half of the Financial Year (FY) 2019–20. In other words, the period April–September 2019 witnessed a growth of only 1.9 per cent on a year-on-year (y-o-y) basis. The total imports during this period at US$ 312.16 billion, declined 3.1 per cent on a y-o-y basis. The trade deficit for the period April–September 2019 stands at US$ 83.7 billion, as compared to the corresponding figure of US$ 98.1 billion during the same period in FY 2018–19. The exchange rate has depreciated throughout the first six months of the year , except in September 2019 (on a y-o-y basis).

Lending to micro, small and medium enterprises shrinks  

In the monetary policy front, in a series of consecutive cuts, the Reserve Bank of India (RBI) has reduced the policy Repo rate by 135 bps to 5.15 per cent as of October 2019, given low inflation and concerns over slackening of growth. However, the transmission of rates has been weak, raising concerns about the effectiveness of monetary policy in reviving real output growth. Bank Credit to the Commercial Sector (BCC) grew by 8.5 per cent, lower than the growth achieved during the corresponding period of the previous year, with the credit extended to micro and small industries actually declining.  The credit squeeze for the MSME sector has been aggravated following the default by ILFS, which hit the Non-Bank Financial Companies (NBFCs).

Revenue shortfall 

On the fiscal front, the large shortfall in tax revenue observed in 2018–19 is likely to recur in 2019–20. In H1 of 2019–20, direct taxes have grown by only 5.2 per cent as compared to a target of 17.1 per cent set in the annual budget. Indirect tax collection has actually declined by (–) 2.1 per cent as compared to the growth target of 19.4 per cent set in the budget. The impact of tax revenue shortfall on total revenue is moderated by the very high growth of nearly 92 per cent in non–tax revenue, mainly on account of the massive transfer of RBI surpluses. Nevertheless, the total revenue growth in H1 of 2019–20 (the Centre’s share), at 18 per cent, is well below the target of 25.6 per cent. The large revenue shortfall is unlikely to be passed on as a larger deficit. Most of it is likely to be absorbed through expenditure compression. This is already evident in the trend observed in H1 of The credit squeeze for the MSME sector has been aggravated following the default by ILFS, which hit the Non-Bank Financial Companies (NBFCs).2019–20. We are, therefore, likely to see a further slowdown in aggregate demand and GDP growth during 2019–20 compared to 2018–19.

Video recording of the event can be viewed here

 

MYR 2017-18

How to leverage open government, research, and data to strengthen public policymaking in India

Around 100 participants from a diverse group of researchers, policymakers, civil society, representatives of international organizations and corporate sector attended this seminar co-hosted by NCAER and 3ie. The event was held in the new Conference Centre offering world-class facilities at NCAER. Participants working on development economics, impact evaluation, for the government and the technology sector discussed on a variety of topics on how to leverage open government, data and research to strengthen public policymaking in India.

Advocates of open government believe that civil society and researchers should have access to all government data and analysis. The argument goes that having this information will allow researchers to produce and validate evidence for policymaking, and will allow the public to be better informed. Policymakers will, in turn, be more apt to listen to a better-informed public. Under what conditions does such a virtuous circle operate best, and what are key entry points to jump start such a circle? Central to this case of seamless information flows is the role now of social media, big data, AI, and machine learning. This brings into play concerns about privacy, ethics, inclusion and sovereignty, crucial issues for development practitioners and evaluators to explore. How can the accountability of the underlying evidence and of policymaking itself be best served in a fast-moving digital world? The proceedings of the seminar brought offered suggestions on many such challenges.

Shekhar Shah, NCAER and Emmanuel Jimenez, 3ie delivered remarks at the opening of the seminar.  The first session explored the conditions under which there is a virtuous circle of open government and data that leads to good evidence and to good policymaking that further reinforces the openness of data and government. The panelists were Avani Kapur, Accountability Initiative, Parth Shah, Centre for Civil Society, Rahul Matthan, Trlegal and was the session was chaired by Dr Shah. In the second session, discussions focused on how the digital world is transforming the generation and transmission of evidence and how its speed should be leveraged to enhance sound policymaking without some of its collateral costs. It was chaired by Marie Gaarder, 3ie and the panelists were Aparna Krishnan, J-Pal SA, C N Raghupati, Infosys and Renuka Sane, NIPFP.

In his Keynote address, Amitabh Kant, Niti Ayog stressed on the need to setup a national open data and analytics platform that can stitch together datasets of government departments. “Data has to be made available for researchers, academicians and young start-ups to work on. Without data there can be no governance, no transformation, and no on-ground changes”, he said.

Co-hosted by NCAER, this seminar was a part of 3ie’s 2019 Delhi Evidence Week, Beyond good intentions: from action to impact.  3ie supports the generation and effective use of high-quality evidence to inform decision-making and improve the lives of people living in poverty in low- and middle-income countries. It provides guidance and support to produce, synthesise and assure the quality of evidence of what works, for whom, how, why and at what cost.

NCAER has served the nation well with its rich offering of applied policy research, unique economic and social data sets, evaluations, and policy inputs for over 60 years.  NCAER’s work covers the entire spectrum of public policy, from macroeconomics to poverty. NCAER researchers generate and analyse empirical evidence to support and inform public policy choices in these areas.  NCAER is one of a handful of think-tanks globally that combine rigorous analysis and policy outreach with deep, scientific field data collection capabilities.

Quality of Care and the Bypassing of Primary Health Centers in India-Implications for Ayushman Bharat

NCAER hosted a seminar on “Quality of Care and the Bypassing of Primary Health Centers in India—Implications for Ayushman Bharat” with Krishna Dipankar Rao, Johns Hopkins University. Shailender Swaminathan, Principal Economist, Leveraging Evidence for Access and Development (LEAD), KREA University, was the discussant. The seminar was attended by members of the NCAER Research Team, and invited guests from various eminent institutions including, Bill & Melinda Gates Foundation, Integrated Research and Action for Development, Federation of Indian Chambers of Commerce and Industry, International Food Policy Research Institute, and IDinsight.

Dr Rao pointed out that India is among many low- and middle-income countries that have invested substantial resources for strengthening facility-based and community-based primary health care services to provide affordable care for improving population health. Yet, patients in India often bypass the nearest government health centres offering free or subsidised services and seek more expensive care, often from private service providers. Dr Rao focused on the quality of care (clinical and structural) and its implications for new efforts to strengthen primary care through the Government of India’s recently launched Ayushman Bharat initiative. While tracing the genesis of the primary health care system in the country, he highlighted various issues that have brought this sector into recent focus, including the predominantly informal nature of primary health care and non-availability of certain crucial services at the primary centres; lessons from the National Rural Health Mission; the role of Accredited Social Health Activists (ASHAs) in the health care system, particularly in rural areas; and wide variations in competencies for health care across the country.

The discussant, Dr Swaminathan stressed the need to mould the primary health care system to align with the goals of Ayushman Bharat. He also suggested the introduction of competency scores for various health centres to assess the quality of services delivered by them and to determine the actual drivers of health-seeking behaviour among patients, especially the factors motivating them to veer towards private health care providers.

Krishna Dipankar Rao is an Associate Professor in the Health Systems Program, Department of International Health, Johns Hopkins University. He is also Research Advisor, National Health Systems Resource Center, Ministry of Health and Family Welfare, Government of India. His research interests lie in the areas of health systems, primary health care, human resources for health, health financing, and economic evaluation. He teaches two graduate courses at Johns Hopkins– economic evaluation, and health financing in low- and middle-income countries.

Workshop on Tourism Satellite Accounts for India and Indian States & Union Territories

NCAER has recently completed a seminal study on Tourism Satellite Accounts for 2015-16 for India and Indian States and UTs for the Union Ministry of Tourism. In this context, a one-day workshop was organised to launch NCAER’s Tourism Satellite Account (TSA) and to study and discuss its findings. The workshop commenced with a welcome address by Dr Shekhar Shah. Shri Yogendra Tripathi, Secretary, Ministry of Tourism, delivered the keynote address. The workshop was attended by officials from Department of Economics and Statistics of several states of India; representatives of travel and tourism training institutes; officials from Central Statistics Office (CSO), Ministry of Tourism, faculty members from NCAER and several researchers and academicians. The Senior Director, Research Planning & Monitoring Department of Nepal Tourism Board also attended the workshop.

A TSA is a powerful tool for understanding and assessing the economics of tourism. It is a framework designed to measure the value addition of goods and services associated with tourism in line with internationally agreed standard concepts and definitions. A TSA is vital to assess the size and contribution of tourism to the economy. State-level TSAs are particularly useful for improving the optimal allocation of local resources to tourism because they measure and reveal the economic impact of tourism on the State’s economy.  Resources can then be deployed where their impact on value addition from tourism is likely to be the greatest, thus ensuring the best use of scarce public resources and ensuring the highest return to private investment in tourism. In this workshop, Dr Poonam Munjal presented the important highlights, methodology and estimation of India’s Third Tourism Satellite Account. This was followed by a presentation by Mr S.V. Ramana Murthy, DDG, CSO who discussed the change in methodology in estimating the Services Sector GDP in the new series which has resulted in falling share of services sector and consequently of tourism sector in GDP. The post-lunch sessions included a presentation on the Regional or State-level TSAs in India by Dr Poonam Munjal and a presentation on Data Sources used in the compilation of TSAs by Dr Palash Baruah and Mr Asrar Alam. A snapshot of the TSA Dashboard was also showcased. The workshop concluded with a vote of thanks by the NCAER study team.

NCAER has led the way since 2006 in preparing India’s regular, five-year TSAs. NCAER pioneered India’s first TSA for 2002-03 for the Ministry of Tourism. Thereafter, it prepared India’s second TSA for 2009-10, and is now completing the third TSA for 2015-16. In 2009-10, NCAER also prepared the first regional TSAs for all Indian States and UTs. This latest NCAER study continues with work on regional TSAs.

 

Request for Proposals (RFP) on Methodological Innovations to Improve Data Quality

RFP launch date: July 22, 2019

The last date for submission of proposals has lapsed

Background:

The National Council of Applied Economic Research (NCAER) is one of India’s oldest and largest independent, non-profit, economic and social research institutes. It undertakes grant-funded research and commissioned studies for governments and industry, and is one of the few think tanks globally that also collects primary data. NCAER has set up a National Data Innovation Centre (NDIC) to serve as a laboratory for experiments in data collection, interfacing with partners in think tanks, Indian and international universities, and government. NDIC forms an important core of NCAER’s long-standing data collection activities. NCAER, has partnered with the Universities of Maryland and Michigan for the NDIC. Initial funding for NDIC is being provided by the Bill & Melinda Gates Foundation.

Current Request for Proposals: 

The focus on data-oriented research and the dynamic policy environment impose a great demand for rapid, high-quality, and policy-relevant data. Changing socio-economic conditions and technological innovations necessitate rethinking of both the kind of data being collected and how they are collected. In that context, quality assurance mechanisms play an important role in influencing the credibility of the data being collected.

Therefore, the focus of the current RFP is to seek proposals on methods to improve data quality across the following themes: gender equity, women’s time use, health system, health insurance and healthcare expenditure, employment and unemployment, family planning, and financial inclusion.

The proposals on these themes should ideally focus on generating evidence pertaining to the following specific areas relevant to data quality:

Sampling frame for selection of ultimate sampling units: The list of sampling units or the sampling frame plays an important role in probability sampling and the accuracy and completeness of the frame dictate the magnitude of the coverage bias in survey estimates. Often the sampling frame for the ultimate sampling units is not readily available. Although house listing has traditionally been used for the selection of households, it can be quite resource-intensive.

This RFP seeks to identify alternative ways of constructing sampling frames for different modes of data collection and of validating the quality of the frames for its potential use in surveys. The proposals on these themes should ideally focus on the following specific areas relevant to the following themes:

Use of paradata as a quality assurance mechanism: In the case of surveys based on computer-assisted personal interviewing (CAPI), a lot of process data (paradata) are being generated, almost real-time, throughout the survey. This may include interviewer productivity indicators, call records, number of attempts made per interview to interview the targeted respondent, interview length, question-level time stamp data based on key strokes, use of question-specific remarks, GPS coordinates, and, audio recording of interviews. The RFP is soliciting proposals for innovative ways of using such data for monitoring data collection activities and intervening as per the findings of such a monitoring mechanism. Can remote monitoring based on paradata provide an alternative to field-based monitoring and supervision as traditionally used in surveys in India? Is this targeted monitoring and supervision method more effective as compared to the random back checks method?

Controlling interviewer bias and variability in outcomes: Computer-assisted modes of data collection ensure the availability of survey data on a real-time basis. This RFP also seeks to promote innovative assessments of such data in order to reduce interviewer bias and variability. Examples include measuring interviewer effort based on different indicators, such as household roster size, number of cases having zero value in consumption expenditure items, number of illnesses or hospitalisation episodes recorded, and number of formal and informal loans taken by the household, and comparing them across interviewers, identifying interviewers opting for more negative screening in order to reduce their burden of the interview relative to other interviewers or having a conceptual misunderstanding about specific questions. How can one use such early signs to minimise interviewer bias and variability in the outcome of interest?

Real time survey data and consistency checks: Real-time survey data can be used to identify intentional or unintentional mistakes in data collection and to take necessary actions for preventing such errors going forward. The RFP looks for demonstration of consistency checks based on a single variable or multiple variables in order to identify errors at the nascent stage of data collection, and to determine how regular tracking can reduce errors in the long run. In this context, it also seeks an answer to the following question: What is the most effective mode and hierarchy of communication that makes it a feasible quality assurance mechanism?

Use of machine learning techniques to identify patterns automatically: Depending on the extent and coverage of the survey, and the CAPI software used for data collection, the volume of paradata generated can be so huge that traditional methods of analysing data may not work. Examples of such paradata include key stroke data, and audio files generated in surveys recording the interviews. In such a situation, the following questions need to be addressed: How can one use machine learning techniques to identify interviewers not performing up-to-the mark? Can this process be automated? How can one evaluate machine learning techniques for achieving this objective?

Secondary data analysis to quantify variability between interviewers: This RFP also looks for application of statistical/econometric modelling in existing survey data for quantifying variability among interviewers across different outcomes, such as, sensitive versus non-sensitive data; straightforward versus complicated questions; and questions leading to a substantial skip versus questions without any skip patterns. It is also important to identify ways of interpreting the results, and the potential explanations behind the various findings.

Eligibility 

Applicants affiliated to any academic or research institutes, non-profit organisations, and private companies that have experience in primary data collection and work out of offices located within India are eligible to apply. We hope that the successful applicants will be able to collaborate with NCAER researchers in future activities, allowing NCAER and the Centre to expand both its network as well as the skill sets of professionals associated with it.

Funding

The Centre will support a budget of up to Rs. 20,00,000/- (inclusive of all applicable taxes) for a period of 12 months. The budget should clearly indicate the actual needs and modes of utilisation of the funding for the proposed project. There is a provision for two such grants of up to Rs. 20,00,000/- (inclusive of all applicable taxes). However, only one grant for each applicant will be considered for funding.

Application Procedure 

All applications must be emailed to Ms. Arpita Kayal, Program Manager, NDIC (akayal@ncaer.org) in a single PDF document (font ‘Georgia’, size 12) with the following components:

A) The proposal (no longer than 6 pages in single space) on research work falling under the focus areas outlined above. The proposal should include the following sections:

1. Project Summary

2. Specific Aim(s)

3. Research Strategy, which would further specify:

a. Significance

b. Innovation

c. Approach and Implementation Plan

4. Expected Outcomes

5. Potential Challenges and Alternative Strategies

6. Timeline

7. Budget and Budget Justification

8. Institutional Background

(The page limit for the proposal is exclusive of details on the budget and applicant’s institutional background.)

B) Curriculum Vitae of the key research staff who will undertake the proposed work.

Expression of interest

Applicants interested in participating in this RFP may inform Ms. Arpita Kayal (akayal@ncaer.org) of their interest. We expect to set up an information sharing phone call with potential applicants during early August 2019.

Selection Criteria

The selection of proposals will be based on the merit of the proposal and the CVs of members of the respective research teams. And, the merit of the proposal will be judged on the basis of the following criteria:

  • Alignment of the proposal with the RFP;
  • Innovativeness in methods outlined in the proposal;
  • Rigour and feasibility of approach;
  • Clarity of thought; and
  • Clarity in writing.

Expected Output

The grantees will be expected to submit a report on the methodology and results to the Centre, which will be posted on NCAER’s website. Successful applicants will be encouraged to submit their results for publications in journals. The study instruments and anonymised data sets will also be placed in the public domain, allowing for free online downloads.

Key dates

Proposal submission due date: 31st August, 2019.

Announcement of the successful candidates: 1st October, 2019.

Contract signing: 1st November, 2019.

Project period: 1st November, 2019 to 31st October, 2020.

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