'Slump in two-wheeler sales in India suggests 'the big slowdown is in'

Nobel laureate Abhijit Vinayak Banerjee on Monday said that while there is nothing in the macroeconomic data that says India couldn't be in a recession, the final answer was unknown to him in the absence of new, reliable data on the informal sector where the anecdote suggests "the big slowdown is in".

"If you ask me, could we be in a recession? There is nothing in data that says we could not be in a recession," Banerjee said during a session at the Tata Steel Kolkata Literary Meet.

He said the problem in giving an emphatic answer to the issue of recession lay in the incapability of the statistical apparatus to capture short term changes in the informal sector.

"The problem (is) with not having any new reliable data on the informal sector, which is where the anecdote suggests the big slowdown is in. That's what's driving. If you look at why, it is the two-wheelers which are slowing down the most.

"It's the people who are in the informal sector, who buy the two-wheelers. So it seems like that's where you might be seeing big slowdowns. Our statistical apparatus is essentially incapable of capturing short term changes, meaning one-two-three year changes in the informal sector," said Banerjee, who won the coveted Nobel prize for economics jointly with his wife Esther Duflo and Michael Kremer.

Banerjee also referred to former Chief Economic Adviser to the Government of India, Arvind Subramanian to drive home his point.

"Look at what Arvind Subramanian is saying. He is saying our statistics look like worse than 1991. That's the claim he made. 1991, that's the one year we had a recession.

"I am careful to not say I know. Given the state of the data, nobody knows. Could we be in recession? It is Arvind's claim that all our macro-statistics, investments, imports, exports look worse than 1991. That was one year when our GDP went down in modern memory.

"So, given that, he is basically saying we could be in a recession. May be, he is not exactly using the word... I don't know, could we be in a recession? That's the problem, we are not measuring the informal sector. We don't know how much it is tagged," he said.

Banerjee said there was really no way of knowing the answer.

"It's not that this question has an answer, and somebody is hiding it. Nobody really knows. We are just picking up the symptoms from different sides. IMF has said they have decided that Arvind is not actually right. And they are also competent people. So I am not taking a (stand), I don't know the answer," he added.