Only Tiny Fraction Of MCA-21 Firms Not Traceable, No Impact On GDP Data, Says Statistics Ministry

Less than 2 percent of the companies in the database used to compute the services sector output could not be traced, India's statistics ministry said as it tried to allay concerns that the GDP data could be skewed.

Of the 35,456 companies included in Ministry of Corporate Affairs' MCA-21 database, only 622 companies were untraceable, the Ministry of Statistics and Programme Implementation said in a statement. About 86.5 percent of these had filed returns, it said.

Controversy erupted earlier this month after a technical study by the National Sample Survey Organisation on the services sector found that around 39 percent of the companies in the database could not be traced or were wrongly classified. That triggered concerns about the quality of the GDP data even as economists and statisticians BloombergQuint spoke with were divided on the impact.

The NSSO study found:

• 38.7 percent of a sample of 35,456 units in the services sector were ‘out-of-survey' when the MCA-21 database was used. This includes closed, out-of-coverage, non-traceable units.
• Another 6.8 percent of the firms were tagged as ‘casualty cases', which includes firms that did not respond.
• This proportion of ‘out-of survey' firms was lower in earlier databases such as the economic census (12 percent) and the business register (22.1 percent).
• About 45 percent of MCA units were found to be ‘out-of-survey' or ‘casualty', while economic census and business register had about 18 percent of such cases.

The Statistics Ministry, however, said today that of the 35,456 companies, around 34,834 had filed their returns. 622 were untraceable perhaps “due to a change in the companies' corporate identification number”.

While a company may have a corporate identification number linked to a national industrial classification code, it may actually be operating an economic activity with a different code, according to the ministry. “This may lead to cases of mismatch of economic activity in the field.”

The ministry said:

• Of the 4,235 companies that were not traceable at their given address by official surveyors of the NSSO, around 3,154 units had filed returns online with the Ministry of Corporate Affairs.
• Of the 7,573 companies categorised as ‘out-of-coverage' by NSSO, 6,767 had filed their returns.
• 1,854 of 2,428 companies categorised as ‘casualty' had also filed their returns online.
• Of the 19,317 companies categorised as ‘in operation' in the technical study, returns were filed by 17,668 or 91.5 percent.

The findings in the technical report will give “a better insight on the challenges that will be faced when the annual survey of services sector is launched and assist in designing strategies to address them and improve quality”, the Statistics Ministry said. But the 74th round of the National Sample Survey will have insignificant impact on the national accounts estimates, it said.