The government owes an explanation for the sharp yo-yoing of published trade figures. Trade statistics do get revised, as do Budget numbers and GDP forecasts. These revisions have often been sharp (up to Rs 15,000 crore in the case of some budgetary revisions). | |
| But there is no recent history of trade numbers being revised to the astonishing extent of 13.6 per cent, as has been done for December 2002 "" but publicised only when announcing the December 2003 trade numbers! |
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| The uncharitable thought would be that the government is massaging current economic performance to make it look very good and thereby spreading the "feel-good" factor a little more. |
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| But this seems unlikely to be the explanation, considering that the December 2003 export numbers are good enough to show a very handsome 24 per cent growth, even without revising the numbers of a year earlier. |
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| So, whatever might have prompted the lowering of the old numbers, it isn't a statistical fix. However, that doesn't leave us any the wiser as to what has caused a sharp change in the old trade figures. |
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| The issue is a serious one, because what it means is that what may be reported as 13 per cent export growth could at some stage become zero growth "" and the two situations do call for completely different policy responses. |
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| If the measurement is defective, the conclusions will usually be wrong, and policy-making full of booby traps. That is why the government owes an explanation. |
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| One also needs to understand the underlying reasons for the export buoyancy. It suggests, for instance, that Indian exporters are among the early beneficiaries of the global economic revival, and that the continuing boom in commodity prices has made a difference to the total; it also suggests that Indian exporters have learnt to cope with a slightly stronger rupee, and that Indian exports are not as price-sensitive as many had imagined. |
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| Third, and perhaps more importantly, Indian exporters now have greater confidence in taking on the world, and this must be at least partly a result of the efficiency improvements that have been worked out over the last few years of difficult market conditions. |
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| The total picture is of course even better than the trade figures suggest, because these numbers exclude trade in services (such as software services). Add the new level of growth there and the over-all performance becomes even more flattering. |
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| What next? The commerce minister has announced a series of trade liberalisation measures and these are welcome. |
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| But whichever government returns to office after the general elections should work towards two objectives: opening up on trade policy such that no formal export-import policy announcement is required every year, and improving the physical infrastructure of the economy so as to facilitate still faster growth of trade. |
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| Port efficiencies, for instance, have doubled but can and need to double again. The road connectivity to ports is being improved but the pace of work needs to be stepped up. |
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| Port charges should come down, as should shipping rates, so that rival exporters from China (to take one example) don't end up paying less for moving goods over greater distances. |
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| And customs procedures need to be considerably streamlined and simplified, so that the hassle factor is reduced. |
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