Indian Exports overstated by 9.4 billion $ by 'mistake' : Commerce Secretary

Discussion in 'Economy & Infrastructure' started by Singh, Dec 10, 2011.

  1. Singh

    Singh Phat Cat Administrator

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    Bad Data? Why $9.4 Bn Export Reporting ‘Mistake’ Is A Scandal


    Is a $9.4 billion hole that difficult to spot? Or a $15 billion export surge in just one industry sector all of a sudden?

    Well, if one is to believe Commerce Secretary Rahul Khullar, exports were overstated by around $9.4 billion during April-October this year because of a system crash in the commerce ministry and mistakes in data classification and data entry.

    This is his incredible statement: “Mistakes take place. Every number for the last seven months was revised. This notion that the government is deliberately cooking up (data) and telling you lies has got to stop,” The Economic Times quoted Khullar as saying on Friday.


    There is no reason why Rahul Khullar's ministry should not be held equally accountable for this serious lapse. AFP

    Mr Khullar, we haven’t accused you of cooking up data— so one does not know where that comes from, unless it is a guilty conscience. Your boss, Anand Sharma, who has just had a fiasco with FDI in retail, cannot afford an export data scam.

    Business Standard reports your statement thus: “I have always maintained that these are provisional and unreliable numbers (emphasis ours). Because of the ongoing controversy on how reliable the numbers are, we have gone back to the books, we corrected the numbers and we did find mistakes and it has not changed any major thing.”

    It gets worse. Listen to what the BusinessLine quotes you as saying: “It is not as if you have a balance of payments crisis because you didn’t know the (export) numbers were wrong. But yes, the trade deficit is a little worse now than what was expected.”

    Well, Mr Khullar, please listen to your own statements— and we are assuming they have been reported correctly – and tell us if the government’s enforcement directorate or income tax officials will happily let companies off the hook if they said they had a computer crash and data entry errors and hence did not pay crores in duty as a result. If a businessman told you “mistakes happen,” will you let him go scot-free? There is no reason why your ministry should not be held equally accountable for this serious lapse.

    Mr Khullar, this appears to be a transparent effort to gloss over several serious issues that will have widespread ramifications for the believability of Indian economic data. For six reasons at least.

    First, you admit that your ministry’s Directorate General of Commercial Intelligence and Statistics (DGCI&S), is producing “unreliable data”. If this is the case, why didn’t anyone report it before outsiders — including Firstpost and three analysts from Kotak Securities – pointed this out? How long has this unreliable data reporting been happening? Have you set up an enquiry to fix the problem once and for all?

    Second, if the computer crash at DGCI&S happened at the start of the financial year, how come it took you six months to report the problem to us? Didn’t you put in place elementary checks right then to see that the country’s data – which moves markets and which the whole world relies on – was correct? Why put out data you yourself believe is wrong?

    Third, your attempt to pretend that this is some kind of minor goof-up boggles the mind. The question is not whether the misreporting of export figures damaged our trade balance, but how you failed to spot it. BusinessLine quotes you as saying: “Even if the accounting or statistical system collapses, the RBI (which has a cross-check mechanism) would have raised alarm bells if the reserves are lesser. The fact that there was no dramatic drawdown on the reserves is a good indication that these (export) numbers were not so far off the mark.”

    This is one of the most callous statements I have heard from officialdom. Basically, it is a cop-out, since you are effectively saying if we goof up someone else will alert us about it. What does this say about your ministry’s own sense of responsibility on such important figures?

    Fourth, the real goof-up is not merely $9.4 billion, but much bigger. For example, the figures given out on Friday spoke of a $15 billion over-reporting of engineering exports, and a $12 billion underestimation in the case of petroleum and gems and jewellery. The net figure may be $9.4 billion, but what has really happened is a $27 billion error – since one error in engineering and another in petroleum and gems cannot really cancel each other out.

    In short, taking other data entry errors into accounts, we are talking about errors adding up to over $30 billion that went on for months and no one smelt a rat. The Financial Express says that “there were exaggerations of up to $0.5-1 billion each in some other product categories and ‘all sorts of things’, including double counting.”

    Mr Khullar, you cannot simply allow “all sorts of things” to go on under your watch.

    Fifth, the problem does not relate only to wrong numbers. In fact, the suspicion raised by the Kotak report was not just about data errors, but whether exports were being deliberately overinvoiced to bring in unaccounted money, now that things are getting hotter for hot money to stay on in tax havens. So, the fact that your wrong numbers “inflated exports by about $9.4 billion, which means a margin of error of about 4-5 percent” is way off the mark. You need to look at the authenticity of even those numbers.

    Sixth, how do you know that the errors pertain only to this year when the DGCI&S computer and software crashed? The Kotak report that originally raised doubts about your export numbers talked about dubious figures in 2010-11. That’s last year. Not this year.

    Let me refresh you on what the Kotak report said, which Firstpost reported in October:

    “Our study of exports data of major engineering companies (including automobiles and metals) shows that the increase in their exports does not reconcile with the steep increase in official exports data. In fact, the gap is quite substantial.”

    The official export data showed 79 percent year-on-year export growth in 2010-11. Exports by engineering companies in the BSE 500 (the cream of India Inc) show just 11 percent growth. If you want to know the difference in dollars, the engineering export jump accounts for $30 billion (up from $38 billion to $68 billion). The figures for the BSE 500 show a jump of just Rs 61 billion (rupees, not dollars). Converted at the rate of $ 1= Rs 44, this is just $1.38 billion.

    As we asked then: Where did the rest of the $28-and-odd billion come from? From itsy-bitsy small engineering companies that are not in the BSE 500? Or was so much of illegal ore mined and sent by the Reddy brothers and their ilk in Goa, Odisha, Karnataka, and Jharkhand?

    Or, as the Kotak report suggests, could it all be overinvoiced exports?

    So, Mr Khullar, if the data went wrong this year due to a computer crash, what happened last year? Another unreported computer crash? Or did we really do phenomenally well in 2010-11?

    Either way, this is a fit case for a complete investigation by the Comptroller and Auditor General. Who knows, we might end up with a data-scam that is even larger than the 2G spectrum one. It is up to you and your boss Anand Sharma to find out.

    http://www.firstpost.com/economy/is-a-9-4-bn-export-hole-just-an-ordinary-mistake-152717.html
     
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  3. Singh

    Singh Phat Cat Administrator

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    Computer, human goof-ups overstated export figures by almost $9 bn: Govt



    NEW DELHI: Computer and human errors have overstated India's export figures by almost $9 billion, the government said on Friday. This confirms fears about the robustness of the country's export performance and adds to the vulnerability of the rupee.
    Commerce Secretary Rahul Khullar said exports for the first seven months of the fiscal would now need to be restated down by $9 billion to $170.8 billion, a calculation error he said occurred due to a system crash in the DGCI&S and mistakes in classification and data entry by officials.

    "Mistakes take place. Every number for the last seven months was revised. This notion that the government is deliberately cooking up and telling you lies has got to stop," Khullar said at a press conference on Friday.

    While the downward revision will mean a small, low single-digit knock to the country's overall export numbers, originally estimated to end the year at around $300 billion, it would magnify an already precarious current account deficit with trade deficit estimated to touch $160 billion in the fiscal. "It is not that we had a balance of payments crisis on hand and did not know it. It is just that the deficit is slightly worse than we estimated," Khullar said.

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    Export growth in November decelerated sharply to 3.7% to $22.3 billion while imports increased 22.5% to $35.9 billion. Cumulatively, exports in April-November posted a 33.2% growth to $192.7billion while imports grew 30.2% to $309.5 billion, leaving a trade deficit of $116.8 billion.
    What is embarrassing for the government is the huge overestimation of exports to the tune of $15 billion for engineering goods and underestimation of $12 billion in case of gems & jewellery and petroleum products in the April-October period.

    The revision will further undermine the credibility of India's economic statistics that many experts have come to disregard. "We estimate export figures based on the amount that other countries have imported," said Jahangir Aziz, Asia economist, JP Morgan.



    Computer, human goof-ups overstated export figures by almost $9 bn: Govt-Politics/Nation-News-The Economic Times on Mobile
     
  4. agentperry

    agentperry Senior Member Senior Member

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    if exports can not be increased then stress should laid down on reducing imports thru technological advancement and govt incentives. this govt dont care about the growth now, elections are coming and to win they need to solve local problems that is inflation and they will go to any extent even killing India's growth momentum because they still believe that international players are like local businessman who cna be lured into tendering when ever a local mla wants
     
  5. tony4562

    tony4562 Tihar Jail Banned

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  6. cir

    cir Senior Member Senior Member

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    So this explains India’s seemingly superb export performance in the face of tough market conditions。
     
  7. Yusuf

    Yusuf GUARDIAN Administrator

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    Indian exports have never being fantastic. There is no claim either of it.
     
  8. Tshering22

    Tshering22 Sikkimese Saber Senior Member

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    Because India is still largely socialistic and leftist in its industrial outlook compared to Japan, Taiwan, Korea, Singapore and even China who has an industrialized look compared to the bureaucratic approach our industrial establishment applies with zero innovation encouragement and a punitive and unjust tax regime.
     

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