# IMPORTANCE OF STATISTICS

In the ancient times statistics was used as the science of statecraft only. Data on a wide range of activities such as population, births and deaths were collected by the State for administrative purposes. However, in recent years, the scope of statistics has widened considerably to bring to its fold social and economic phenomena. The developments in the statistical techniques over the years also widened its scope considerably. It is no longer considered to be a by-product of the administrative setup of the State but now it embraces practically all sciences, social, physical, and natural sciences. As a matter of fact, now statistics finds its applications in various diversified fields such as agriculture, business and industry, sociology; economics, biometry, etc. Thus, these days statistics finds its application in almost all spheres of human activity.

Statistics and State

In earlier times, the role of the State was confined to the maintenance of law and order. For that purpose, it used to collect data relating to manpower, crimes, income and wealth, etc., for formulating suitable military and fiscal policies. But the role of, State has enlarged considerably with the inception of the concept of Welfare State. Thus, today statistical data relating to prices, production, consumption, income and expenditure, etc., are extensively used by the governments world over for formulating their economic and other policies. To raise the standards of living of its population, developing countries such as India are following the policy of planned economic development. For that purpose the government must base its decisions on correct and sound analysis of statistical data. For instance, in formulating its five year plans, the government must have an idea about the availability of raw materials, capital goods, financial resources, the distribution of population according to various characteristics such as age, sex, income, etc., to evolve various policies.

Statistics in Economics

Statistical analysis is immensely useful in the solution of a variety of economic problems such as production, consumption, distribution, etc. For example, an analysis of data on consumption may reveal the pattern of consumption of various commodities by different sections of the society. Data on prices, wages, consumption, savings and investment, etc., are vital in formulating various economic policies. Likewise, data on national income and wealth are useful in formulating policies for reducing disparities of income. Use of statistics in economics has led to the formulation of several economic laws such as Engel’s Law of Consumption, Law of Income Distribution, etc. Statistical tools of index numbers, time series analysis, regression analysis, etc., are vital in economic planning. For instance, the consumer price index is used for grant of dearness allowance (DA) or bonus to workers. Demand forecasting could also be made by using time series analysis. For testing various economic hypotheses, statistical data is now being increasingly used.