Defective data yields flawed policies

EDITORIAL: The finance minister has expressed frustration and anger over the formulation of economic policies and decision-making based on outdated data. This has rightly brought the Pakistan Bureau of Statistics (PBS) into the spotlight. Its officials must be held accountable.

The controversy began with strong criticism — including from this publication — of the flawed GDP growth figures, where PBS estimated over 5 percent growth in the last quarter of FY25 on an utterly unjustified basis. Additionally, the poverty and employment data are outdated, while the government’s estimates significantly diverge from those of the World Bank and independent economists.

There are clear indications of an attempt to overstate GDP growth in FY25. A prime example is livestock, which accounts for nearly two-thirds of agriculture. While important crops are declining by 13.5 percent, PBS estimates livestock growth at 4.8 percent.

However, the last livestock survey was conducted in 2005-06. A new survey, originally scheduled for completion in FY21, has faced repeated delays and remains incomplete. When questioned, the chief statistician absurdly blamed political uncertainty for the five-year delay.

He then tried to justify the livestock growth figures based on annual fodder consumption. But how can fodder consumption grow at such high rates when fodder crop production is declining? According to the methodology published on the PBS website, livestock estimates are derived using 2015-16 constant prices, factoring in natural growth and regeneration. Yet, neither the growth figures nor the PBS’s explanations make sense.

There are other notable discrepancies as well. For instance, in the industrial sector, Small-Scale Manufacturing (SSM) is reported to have grown by 8.8 percent, whereas Large-Scale Manufacturing (LSM) declined by 1.5 percent. How can SSM grow when the downstream segment – LSM — is shrinking? That is akin to saying auto parts assemblers are booming while car production and sales are falling. The math simply does not add up.

Similarly, the construction sector is estimated to have grown by 6.6 percent, while its proxy indicator — local cement dispatches — is down by 3 percent. PBS justifies this by assuming full utilisation of the budgeted Public Sector Development Programme (PSDP), which is implausible given the government’s push for a primary fiscal surplus. PSDP was in fact severely underutilised in 9MFY25, a fact known at the time PBS released the growth data.

Another glaring example is the electricity, gas, and utility sector, which PBS claims grew by 29 percent — implying over 100 percent growth in the last quarter alone. However, NTDC (National Transmission and Dispatch Company) data shows that power generation fell by 0.3 percent in 11MFY25. Meanwhile, a reported 10 percent growth in public administration and social security is also questionable when current expenditure is stagnating in real terms.

It appears there was a deliberate effort to overstate GDP growth by PBS, which operates under the Planning Ministry. Now, the finance minister is publicly criticising them.

It is a compelling need to reform PBS and restore the integrity of national data. The flaws at PBS extend well beyond GDP estimates. Serious doubts persist around other indicators such as household income, unemployment, poverty, and population data — all of which directly influence socioeconomic policymaking.

PBS suffers from serious capacity issues. Though it is supposed to function autonomously — like the State Bank of Pakistan. However, it lacks depth and independence. The current chief statistician appears arrogant and defensive, often justifying clear errors. This is too critical a position to be handled so carelessly.

The government must take notice. Competent professionals with integrity and independence must be appointed to ensure that both public and private sectors receive accurate data to support informed decision-making.

Copyright Business Recorder, 2025