Rank exaggeration

A look at India’s rapid rise in the World Economic Forum’s Global Competitiveness Index, first published as an oped in the Hindustan Times:

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It’s clear that the Modi government can’t get enough of comparative rankings and indicators. And this is understandable: despite a solid reform push and favourable (if controversial) official statistics, many feel that the economy is performing well short of its potential. The latest piece of bad news was that unemployment – the Modi government’s most pressing challenge – is at a five-year high.

It makes sense, then, that the government tom-tommed India’s climb from 55th to 39th place in the World Economic Forum’s Global Competitiveness Index 2016-17, after a comparable jump the previous year from 71st. So is this finally evidence that the government’s reforms are paying off?

Not quite. There’s an important qualification that much of the news reporting missed: 81 of the 112 variables that determine a country’s competitiveness score arise from a survey of corporate executives that asks respondents to rank items on a scale of 1 to 7. In other words, each country’s score is predominantly the aggregation of subjective corporate judgments. The correct interpretation of India’s ranking progression is that India’s competitiveness has greatly improved in the past two years in the opinion of many corporate executives. Corporate opinion is undoubtedly important, but it’s not the same as objective reality.

The increase in India’ ranking is also an artefact of how different countries stack up. India’s raw score went from 4.2 in 2014-15 to 4.5 in 2016-17, causing its ranking to jump from 71st to 39th place. This was in part because there were 36 middle-income countries clustered above it, converting a 0.3-point increase into a big rise up the ladder. With the same increase in absolute points, Israel went only from 27th to 24th and Iceland from 30th to 27th. That said, 0.3 points is nothing to sneeze at, only Albania, Iceland and Israel had an equivalent increase in their scores.

So what drove India’s rise, other than the artefacts analysed above? The categories that contributed the most were “institutions”, “innovation” and “infrastructure”. The institutions score includes perceptions of corruption and due process, and the BJP government – at least at the Centre – has been free of scandals. But recall that even the UPA was substantially free of such controversies in its initial years, and the big scams came home to roost in the second term.

The innovation score includes private sector R&D, research institutions and so on, and is likely driven by the explosion of startups in the technology and services arena. The infrastructure score is presumably being driven by activity in roads, rail and power, sectors in which corporate executives hold the ministers in high regard. Critics, including myself at the blog Chunauti.org, have pointed out that many of their claims are exaggerated, but the corporate consensus here appears positive.

There is no doubt that the government is trying to kickstart the Indian economy, be it with attempts to ease the business environment, speeding up the building of infrastructure or by loosening labour laws. But with results hard to come by in a difficult global environment, the government’s PR machinery is in overdrive, seeking signs of progress wherever they might be found, or even constructed. And it’s the media’s job to separate the wheat from the spin.

Arvind Panagariya spins an infrastructure tale

There’s something about serving in the Modi government that converts seemingly sensible people into inept spinmeisters. Consider the respected Columbia University economist and NITI Aayog Vice Chairman Arvind Panagariya. In an 8 May 2016 Business Standard op-ed titled The turnaround in infrastructure, he reeled off the Modi government’s many accomplishments in this arena. Following which he warned critics to “ponder the fate of infrastructure in the country had the previous administration continued.”

Except, if anybody bothers to look closer, Panagariya’s claims turn out to be irrelevant, misleading or simply false. In fact the “previous administration” equalled or exceeded many of the Modi government’s infrastructure achievements.

Consider highway construction. Panagariya points out that the government has unblocked Rs 3.5 lakh crore out of Rs 3.8 lakh crore worth of stuck road projects, and that “the construction (sic) of national highway projects awarded has risen from 3,500 kilometres in 2013-14 to 8,000 kilometres in 2014-15 and 10,000 kilometres in 2015-16.” So far so good.

But then he proudly adds:

“Road construction has risen from 8.5 kilometres a day during the last two years of the previous government to 11.9 kilometres in 2014-15 and 16.5 kilometres in 2015-16.”

A near doubling of the highway construction rate, pretty impressive right?

Not even close. Real data show that, in its last two years, the United Progressive Alliance (UPA) built 13.7 km/day of highways, compared with 14.3 km/day built in the first two years of the Modi government. That’s pretty much the same pace. In Panagariya’s defence, his fibs aren’t as blatant as Roads Minister Nitin Gadkari’s ravings (see Nitin Gadkari’s highway jumla), but they’re still way off.

As the chart below shows, there is no need to lie. The UPA did well, and in 2015-16 the Modi government did a bit better.

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Let’s look at railways next. Panagariya claims that:

In railways, the average rate of expansion of tracks has risen to 7 kilometres per day during 2015-16 from 4.3 kilometres per day during the previous six years. Investment in railways during 2015-16 has been double the average during the preceding five years.

An impressive increase, at least at first glance. But hold on. Panagariya is conflating track expansion with track commissioning. This detail is taken from Rail Minister Suresh Prabhu’s 25 Feb 2016 budget speech, in which Prabhu changed the measure of rail expansion from “completion” to “commissioning” because “nothing has started functioning until it has been commissioned”.

Fair enough. But, just out of curiosity, what does the old “track completion” metric, used for so many years, show?

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Say it ain’t so! What the Modi government claims to be a six-year track expansion high under this convenient new metric turns out to be a six-year low according to the now-discarded metric. Could the policy paralysed, rudderless UPA really have built tracks faster than the 56-inch Modi Sarkar? We’re still waiting to hear whether the government has hit its more ambitious 2,500 km target for 2015-16 (according to the old measure), but keep in mind that even this just about tops the UPA’s 2,300 km plus record in 2010-11 and 2011-12.

What about the claim that the Railways’ investment in 2015-16 was “double the average during the preceding five years”? A former Railways official points out in a 10 May 2016 Indian Express article that the Rs 94,000 crore railway investment figure for 2015-16 includes Rs 15,081 crore in funding for joint venture partners, a category not previously included. A like for like comparison shows the Railways’ investment to amount to Rs 70,000 crore in 2015-16, a record number but nowhere close to double the previous five-year average of Rs 48,000 crore. Busted.

(This propensity to spin isn’t new, as Manoj K noticed in Railway Ministry: 8 Achievements That Really Aren’t in July 2015.)

There are other claims in Panagariya’s op-ed, including some that may be true. Consider:

In domestic civil aviation, the total number of passengers carried has jumped from 66.4 million in 2014 to 80.8 million in 2015.

Great, but this had almost nothing to do with government policy.

In power, the government has already electrified 6,816 villages in the last two years compared with 5,189 villages in the three years before that. The prime minister has now announced his intention to bring electricity to the 12,000 villages or so that are yet to be electrified, by May 1, 2018.

A good effort, no doubt, but still modest once we look at a longer period. Turns out that rural electrification under the UPA in 2006-07, for instance, proceeded at four times the NDA’s rate. Cherrypick much?

Furthermore an investigation by The Hindu‘s Samarth Bansal shows even this 7,000 number to be exaggerated, and “that unelectrified villages have been counted as electrified”. To be fair the UPA’s numbers could be considered similarly suspect, but the fact is that the UPA vastly outperformed the Modi government in this arena.

One could go on, but it seems clear that Panagariya, like so many others in the Modi government, is guilty of cherry-picking or distorting data to make the government’s case. Not only is this futile, it obscures and even undermines the government’s genuine achievements. But in the interpretive dance that is the Modi Sarkar, facts don’t seem to count for much.

What are you smoking Mr Gadkari (and can I have some)?

Of all the topics covered in this blog, India’s highway construction programme attracts the most yawns from friends and family (and the least interest in social media). But apart from its intrinsic importance and the resonance that highway construction programmes have long had in discourses of modernity — think the New Deal and Hitler’s autobahns — it also offers a good advance indicator of a government’s project execution abilities. And the Modi model involves claims about effective execution, if nothing else.

Which may be why the Modi government persists in making patently false claims about its record in this area. In a 19 May Business Standard interview, the roads and shipping minister Nitin Gadkari claimed that road construction had been “going on at a pace of two km/day” and “Today, it is 12 km/day.” His observant interviewers pointed out that his ministry’s own figures showed that the pace of road construction in 2013-14, before the Bharatiya Janata Party (BJP) came to power, had been 11.7 km/day, and was mostly unchanged at 12.1 km/day in 2014-15 under the BJP.

These numbers relate to a variety of highway projects. But if you look specifically at national highways, which are the focus of private sector interest and for which data is more freely available, the numbers look even more dismal for the government:Screen Shot 2015-05-20 at 12.19.18 am

The pace of highway construction under the auspices of the National Highway Authority of India is the lowest in 2014-15, the first year of the Modi government. It would be perfectly reasonable for the government to argue that its policies will take time to deliver results on the ground, and that the current slowness in highway building is a legacy of decisions taken by the previous government. But that’s not what the government is saying: it is instead making false claims about its record that do not stand up to the most basic scrutiny. Do pass the chillum, Mr Gadkari.

Road construction has slowed, not accelerated, under Narendra Modi

In a 9 December press release, Crisil Research found that highway projects awarded in the fiscal year 2013-14 are showing “a sharp pick-up in execution amid a pro-active government and faster approvals by implementing agencies”.

While this may be true of those 16 projects, it has yet to translate into an acceleration in the road building programme of the National Highway Authority of India (NHAI). The data show that highway construction has slowed in the 2014-15 fiscal year beginning in April 2014, and been particularly slow since the Prime Minister Narendra Modi took office in May 2014.

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Between April and October 2014, 705 km of highways were completed, down 23% from the same period in the previous year. This translates into a daily rate of 3.3 km, down from 4.3 km the previous year. If we look at the period in which the Modi government has been in power for which data are available (June-October 2014), the daily rate is 3 km per day, 40% lower than what the United Progressive Alliance (UPA) recorded between April 2013 and May 2014.

What about the implementation of incomplete highway projects? One of the complaints against the UPA was that road projects that had been awarded were failing to get off the ground because of red tape and financial difficulties.

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The chart above shows that the number of highway projects under actual implementation has fallen since March 2012 and remained low. In fact, since the Modi government was sworn in the number of road projects where work is underway has dropped a tad from 3,254 (in May 2014) to 3,213 (in October 2014), while the number of projects in which work is waiting to start has gone up from 9,442 to 9,984.

The following chart shows this in percentage terms.

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To be fair, it is too early to judge the Modi government’s infrastructure building record. Land acquisition remains challenging, bank loans are still expensive and infrastructure developers have a lot of debt to pay off before they are able to invest afresh. Some will no doubt argue that many of these problems are inherited.

But for now let’s go with Arun Shourie: “When all is said and done, more is said than done”.