Ownership of CMIE and their alleged proximity to P Chidambaram raises questions on the credibility of its Job Survey

Here is the crux of the matter that is not widely known: CMIE, that brings out periodic Job Survey, is wholly owned by Mr Ajay Shah (and his family), the same person who also happens to be one of the main accused in a mega scam commonly known as ‘NSE Co-location’ scam.

The last couple of weeks has witnessed a growing focus on the number of jobs that have been created by the current government. A major reason behind this has been the lack of availability of an official source of employment statistic but the government has tried to change this as it has undertaken the Periodic Labour Force Survey. The results of this survey for the last year will be released soon by the government, however, as we wait for the official statistic on jobs, CMIE has come up with its own pessimistic estimates of “jobs” in India.

In several cases, analysts are not as pessimistic, with reason. For example, an analysis today says that in 4 years, 18 million jobs have been created in the transport and professional sector alone.

Here is the crux of the matter that is not widely known: CMIE, that brings out periodic Job Survey, is wholly owned by Mr Ajay Shah (and his family), the same person who also happens to be one of the main accused in a mega scam commonly known as ‘NSE Co-location’ scam.

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Mr Shah has been accused of accessing data from NSE on a preferential basis in connivance with the authorities and sharing this data with certain stockbrokers for use in High-Frequency Trading. The scam is being investigated by SEBI, CBI as well as by Income Tax authorities.

The current MD of CMIE is Mr Mahesh Vyas, who happens to be the brother-in-law of Mr Ajay Shah. The timing of the commencement of this Job Survey raises suspicion on the motivation as well as the credibility of the data. The co-location scam came to public light in late 2015, and the first Job Survey was out in April 2016.

There are several eminent economists who are consistently questioning the veracity of the data, as well as methodology adopted by CMIE. It is pertinent to note that as the co-location scam keeps progressing further (FIR has been filed by CBI against Mr Shah in June 2018), the CMIE reports are getting shriller with bleaker unemployment picture, quite in contrast to several other data points and anecdotal pieces of evidence. Could it be a strange coincidence?

Another interesting aspect to note about this “Survey” is that, ever since its first release where the number of those employed was pegged at 410 million, the trend line of jobs has been steadily declining, despite a ‘V’ shaped recovery in the GDP growth rates during this period.

One fails to understand how can an economy grow at 7% per annum while steadily losing jobs quarter after quarter, as claimed by CMIE? As evident from the growth figures, there was indeed a temporary slowdown in the GDP growth rate, however, the economy recovered immediately, and the growth rate accelerated. Surprisingly, the jobs as measured by CMIE does not provide such a rebound for the employment situation and that seems highly unlikely.

If the labour employed is going down then how can there be an increase in the growth rates? This points at deep inconsistencies within the CMIE data base and it categorically indicates that this data is unreliable. The question that does exist is that whether such inconsistencies are because of genuine errors or are they a case of a deliberate attempt to cause confusion and paint a pessimistic picture of India’s job creation? Given the ownership of CMIE, it appears that it is not a case of a genuine mistake.

A comparative chart of CMIE Job Survey and GDP growth rates are given below.

Source: CMIE website, Trading Economics

A damning story on Ajay Shah in the Hindu Business Line talks of another angle: Ajay Shah routed many of his clients through his wife’s sister, Ms. Sunita Thomas’ IT firm – Infotech Financial. Ms. Thomas is also the wife of Mr. Suprabhat Lala, who was chief of the trading division of NSE, at the time of this scam. Interesting to note that even in this story (as well as in several other stories across various media outlets, links for which are given at the end), Mr. Ajay Shah’s ownership of CMIE is never ever mentioned.

Screenshot from the latest audited Balance Sheet of CMIE showing the shareholding pattern:

Screenshot from the latest audited Balance Sheet of CMIE showing the shareholding pattern

Even the website of CMIE lists Ajay Shah (Director) and Mahesh Vyas (Managing Director).

CMIE list of directors

Several of the news articles (as well as Wikipedia entry on NSE Co-location scam at the time of writing this article) mentions that Mr. Ajay Shah is a very close confidante of Mr P. Chidambaram. Given this information, and the ownership pattern of CMIE, any ‘Job Survey’ from CMIE should be taken with a pinch (or a tonne) of salt, as one would take it from a Congress IT cell.

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