Report warns about risks from housing data revamp

MUMBAI: A new report warns that proposed changes to housing data collection risk overcorrecting an implementation problem rather than fixing a design flaw. Critiquing the govt's plan to shift to monthly rent surveys, the authors say the move amounts to "throwing the baby out with the bathwater," based on a flawed diagnosis and an unnecessarily drastic remedy.

The report, by Praggya Das, former adviser-in-charge at RBI's monetary policy department, and Ashish Das, a mathematics professor, acknowledges distortions in housing inflation under the CPI but argues these stem from how the system is implemented, not the statistical framework. The issue matters because housing carries a weight of 21.67% in urban CPI and over 10% at the all-India level.

They point to rent imputation as the main weakness. CPI relied on House Rent Allowance forgone by employees in govt or employer-provided housing rather than market rents, making inflation sensitive to administrative decisions. The 7th Pay Commission's salary hikes mechanically pushed up measured rents, while routine transfers could make rents appear to fall even if market rents were unchanged.

MoSPI has blamed the panel method, under which only one-sixth of homes are surveyed monthly, and proposed surveying all 25,000-plus dwellings every month. The authors dispute this, saying the panel method is mathematically sound and that unexplained dips likely reflect minor data-entry or cleaning errors, not a flaw warranting a costly overhaul.

The report instead suggests incremental fixes: retain the panel method with a shorter rotation, keep the geometric mean, avoid artificial spikes through better implementation, and improve dwelling classification.


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