National Council of Applied Economic Research
Opinion: DL Wankhar, Poonam Munjal and Palash Baruah.
These households or persons are generally difficult to approach, or they refuse to entertain survey investigators. Even when they do let them in, much of the data, especially related to income or expenditure, tends to be under-reported.
This is a serious problem for a rapidly growing country like India, where incomes are rising at a fast rate. Discounting such a large proportion of the population not only leads to estimates that are biased toward low-income households, but also jeopardises evidence-based policymaking.
The Indian government has recognised this issue. In a brainstorming session last month, the Ministry of Statistics and Programme Implementation (MoSPI) invited suggestions from several stakeholders on developing strategies to improve responses from high-income groups and gated societies in government surveys. This was the first initiative of its kind by the ministry, signalling that the government intends to take feasible and practical actions to mitigate this problem.
It may now be time to look at data points beyond the ordinary.
The reticence of the rich
Realistically, there are a number of reasons why the wealthy are hesitant in sharing information with survey investigators. These range from being simply unaware about the purpose of surveys and their utility, to being sceptical about how data will be used. Besides, for obvious reasons, there is rampant distrust in society when it comes to hosting strangers and responding to their long list of questions.
Having said that, collecting information through household surveys is an important activity which collapses if respondents are unwilling to share or if they withhold or under-report socio-economic data.
The Collection of Statistics Act 2008 facilitates the collection of data on economic, demographic, social, scientific, and environmental aspects, providing adequate protections and restrictions on the use of such information. It also includes various penalties for refusing to supply particulars or making false statements.
However, with non-responses increasing rapidly, there is a need to shift to alternate data collection methods. With the increasing usage of technology in our daily lives, a number of data points can prove to be useful in capturing critical social and economic data.
Capturing data via UPI, travel, rent
UPI usage in India is growing at a fast pace. Being one of the most revolutionary outcomes of “Digital India”, it has brought a seismic shift in payment preferences from cash to digital transactions. From street vendors to large shopping malls to online platforms, all now provide options for making digital payments and transfers. The number of digital payment transactions has grown manifold, from 220 crore in 2013-14 to a staggering 18,592 crore in 2023-24. In value terms, it is a surge from Rs 952 lakh crore to Rs 3,658 lakh crore—an astonishing growth of over 280 per cent.
When combined with data from e-commerce platforms, digital payments can provide rich data. Companies are already utilising these digital systems to grow their business, so the government could also tap into them for collating useful data insights on expenditure patterns.
Indeed, the government has recognised the utility of such unconventional data sources and is contemplating collecting e-commerce data from 12 towns, mapping popular items on different platforms for the new Consumer Price Index (CPI) series.
The digitisation of Banking, Financial Services, and Insurance (BFSI) services is another useful source of financial data. Analysing such data can provide useful insights into consumer preferences and purchases of products and services. Such data provides a more comprehensive view than respondent-based data collection. Further, banking data like KYC information as well as electoral data could form the basis for sampling design.
People are also increasingly using travel-related apps and online platforms to purchase tickets and book accommodations. Further, streamlining of the processes can help in the collection of travel and tourism-related data.
These are just a few examples of where multiple data points can be tapped and collated.
Balancing caution & creativity
Unlocking the rich and diverse information from digital and online sources could be a game changer for the generation, collation, and production of official data. This possibility is now more feasible than ever. However, there is a need for caution.
Data security and privacy have always been key concerns when it comes to accessing online and digital information. The well-heeled and high-income groups are averse to sharing and revealing information for many reasons, but data security and privacy are at the top of the list.
While traditional, non-technology-based methods remain important, experimenting with new approaches could be beneficial. These may include identifying high-income households, or those living in gated societies, where at least one member is a government employee. It may be easier to garner their trust due to their awareness about the importance of such surveys. Even better, such government employees could be deployed as survey interviewers in their localities. Widespread awareness campaigns are also extremely important.
In some wealthy countries, another method being used is to leave diaries with households during the first visit for them to record daily expenses. These diaries are then collected during the second visit.
In the initial phase, the government could commission a study to assess the feasibility, practicality, and utility of accessing data through these unconventional methods.
DL Wankhar is a retired officer of the Government of India; Poonam Munjal and Palash Baruah are respectively a Professor and a Fellow at the National Council of Applied Economic Research (NCAER), New Delhi. Views are personal.