4% rise in exports in November while imports go up 29%.
The government on Friday admitted to a blunder that shocked many within core administrative circles and far outside it: its report on the export data during April-October is in excess by as much as $9.4 billion, resulting in a margin of error of 5.52 per cent.
The faux pas happened on the part of the department of commerce functioning under the commerce and industry ministry. Commerce secretary Rahul Khullar, while revealing this, was candid, but not particularly ruffled. “I have always maintained that these are provisional and unreliable numbers. 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,” he said on Friday. “All that has happened, which we figured out later, was that of the total exports basket, there had been an error in the order of $9.4 billion. That now stands corrected…mistake happens,” he told reporters here while releasing the initial export and import numbers for November.
|Figures in $billion
*Source: Ministry of Commerce and Industry
The top official said the problem was with data entry error. The payment gateway software (IceGate) that records the export and import numbers crashed in the beggining of this fiscal, leading to a series of errors, he added.
The software was later upgraded. The “main problem” was due to “excess reporting” of exports in some of the key sectors such as engineering goods, petroleum products and gems and jewellery.
Exports topped $22.3 billion in November — up 4.20 per cent from $21.4 billion in the same month last year. As for imports, they grew by 29.14 per cent, reaching $35.9 billion from $27.8 billion in November 2010, resulting in a balance of trade of $(-)13.6 billion.
Total exports during April-November reached $192.7 billion, registering a year-on-year growth rate of 33.2 per cent. Cumulative imports during this period reached $309.5 billion — an increase of 30.2 per cent over last year. Thus, the trade deficit during the first eight months of the fiscal stood at $(-)116.8 billion.
Khullar said it would be difficult to reach the set export target of $300 billion in this fiscal, even as he underscored the problem of a ballooning balance of trade. “We are getting close to $300 billion, but not quite there. There is a serious problem with the trade deficit.”
The official said that the balance of trade for the entire fiscal might end up at around $155-160 billion by the end of this financial year. In fact, from July onwards there had been steady deceleration of exports as well as imports. On that, the rate of fall was faster in exports compared to imports.
Responding to the statistics, Indian Institute of Foreign Trade said the over-reporting of $9.4 billion would not make much of an impact. “It is not a huge correction,” said K T Chacko, its director. “Going ahead, exports are bound to be hit. Even so, the positive thing that is emerging now is the return of demand in the US markets. Also our exports to the Asean markets are growing.” Overall, the rate of growth of exports is “positive”, he noted, “but the issue here is at what rate.”
Exporters, on the other hand, have demanded for export finance at a concessional rate of not more than 7 per cent for the small and medium sectors and 9 per cent for the large trading houses.
Federation of India Export Organisations said exports are day by day becoming uncompetitive with the abnormal increase in the cost of inputs and packaging material. This would nullify the scope of margins offered by rupee depreciation, according to the federation’s president, Ramu S Deora. “We ought to have consistency in our reforms and policies,” he said. “This is in order to maintain our image as a reliable supplier in the global market.” Any stumbling blocks that halt reforms conveys a wrong signal overseas, he noted. “That will adversely affect the inflow of dollar into the country.”