Forecasting is a difficult business. And that is why we leave it to the so called “experts”. But our experts have shown themselves to be utter nincompoops. More than any expertise, it is “herd mentality”…..or worse, political motivation….that drives these experts.
Rupee: When the rupee was falling, and had touched Rs 63.33 to the $ on 20th August, the BJP was having a field day, mocking that the rupee had crossed “Sonia’s age” and would soon cross “Manmohan Singh’s”. Forget the BJP: their response to most issues is facetious, driven by the urge to take jabs at the Congress more than to make an intelligent expression of their own views or ideas (which I doubt they are capable of). But what about the experts?
Well, the venerable Deutsche Bank said on that day that the rupee would cross Rs 70 by September 2013. There was the equally venerable Moneycontrol.com which went a step ahead and said on 29th August that the rupee would touch 75 to a dollar. Why this “boldness” of prediction on moneycontrol’s part? Because the rupee had just crossed its lowest ever point of Rs 68 the day before. If this is not herd mentality, what is?! Neither Deutsche Bank nor Moneycontrol got it right of course as the rupee corrected itself from artificially driven-down levels. Both these experts were utterly wrong.
Fiscal deficit: Back in December 2012, three months before that fiscal year ended, one expert after another was suggesting that the fiscal deficit would end up at 6% or thereabouts. Their reason for this expert opinion: trend analysis of the past few months! And herd mentality of course!
Sunil Sinha, Principal Economist of Crisil predicted that the fiscal deficit would end at 5.8-5.9% that year. Not to be outdone, Rupa Rege Nitsure, Chief Economist (an even bigger title than that of Sunil Sinha’s?!) of the Bank of Baroda predicted that the fiscal deficity would end at 6%. The source for both these is http://tinyurl.com/mf3zgo2. Such expertise I say! So much belief in Chidambaram! I wonder if both these experts were not mixing their own political beliefs with their professional jobs! The reality of course was that Chidambaram succeeded in keeping the fiscal below 5%, just like he had said he would do.
Sensex: Now this has to be the most favorite topic for experts to forecast! No, make that the 2nd most favorite job….the favorite is the next one I will write about. Well, sensex forecasters are a particularly driven lot, outdoing each other with ever optimistic or ever pessimistic forecasts all the time. When the sensex is going down, all of them predict it will touch new lows, and vice-versa.
Religare Capital, one more of the “venerable” types (by now, I wonder if such adjectives should even be used to describe such experts!) predicted on 26th September this year that the sensex would end March 2014 at 17000 (http://tinyurl.com/mrlt74m). As if in salute to this forecast, the sensex has risen to 20,800 odd levels!
Not surprisingly, experts are now predicting that the sensex will cross its life-time high shortly! What is very funny is that one expert is even offering a reason for this buoyancy. Apparently, the market has factored in the BJP’s success in 2014!
This one is clearly our most favorite pastime, especially towards the end of a government’s tenure! And this is one area where our pollsters get it wrong most of the time! But there is one particular poll that gets it wrong with remarkable consistency! That is the “Mood of the Nation” poll undertaken by the “venerable” India Today.
Sample its forecasts ahead of the last three general elections:
December 1998: Congress+ would get 305 (!), BJP+ 135. Reality: BJP put in its best performance ever, and formed the government.
April 2004: BJP+ would get 282 seats (!), Congress just 165. This poll was just a month before the elections…..and still! Reality: Congress+ got 218 seats, BJP+ just 181.
April 2009: Again, just one month before the actual polling. The magazine said UPA would get 200, NDA 177. Result: UPA 262, NDA 158.
If there is one thing that is predictable is that the final result will be the exact opposite of the forecast! To be fair to India Today, it is not the only one getting it wrong all the time. Almost everyone gets it wrong most of the time. Everyone gets some pieces right, and that’s why they start crooning that they are the best. In the process, they fool their viewers/readers, not that they really care about it. That’s why I read the current polls predicting a rout for the Congress and a sure win for the BJP with hope in my heart!
The real truth I suspect is that poll forecasting is politically motivated. Most polls are unfortunately conducted by media groups, and all of them have their preferences. None of them even want to get to the truth. Because if they did, they would recognize that sample sizes of 25000-50000 cannot be adequate in a heterogeneous land like ours. That too in a voting system where candidates win with less than 30% of the votes polled…..