New Delhi, May 8; GANASHAKTI: Raising fresh doubts over buoyant GDP figures reported under the Modi government, Mint has reported quoting a NSSO study that around 36 percent of the companies included in the MCA-21 database were either untraceable or wrongly classified.
“Out of the 39 percent out-of-survey units in MCA, 21 percent were found to be out of coverage and another 12 percent were non-traceable (which in number is nearly 4000 units). In case of EC and BR frames, nearly 6 percent and 14 percent were out of coverage respectively even though there were updations of these two frames,” NSSO said in the survey.
The gaps were so severe that two detailed reports based on the survey had to be scrapped after the study results showed significant unreliability of data.
The database is a key factor introduced in India's GDP calculations. The report quoted statisticians say that the decline in use of tested database in India’s national accounts have affected the credibility of official statistics from sources like the Central Statistics Office (CSO), the report added.
The report quoted R Nagaraj, professor at Indira Gandhi Institute of Development Research in Mumbai called this "a devastating blow for CSO".
"Some of us repeatedly asked CSO officials to verify the MCA-21 numbers before using them in national accounts, but they finalised the new series without adequate scrutiny and debate," he added.
Critics have pointed out two key factors — that the database includes many paper or shell companies, that have been deemed "active"; and that methodology of applying the database lends itself to overestimation bias in the GDP numbers. Many have further demanded the MCA-21 data be made public so that researchers could examine the same.
While statisticians at CSO have defended the use of the new database, colleagues from the NSSO have warned about the inconsistencies.
PC Mohanan, former NSC member and former NSSO chief, said the CSO should have done some kind of "critical scrutiny and validation" either through "quick surveys or by comparing with other databases, or consultations with accountants familiar with company filings".
The number of defunct companies in India increased by more than 22 percent in the first eight months of 2018-19, official data showed.
Thus as part of the plan to crack down on shell or paper companies, the MCA had till November 30, 2018 struck off 6.07 lakh defunct companies, about a third of the total 18.28 lakh registered companies, from their official records.
