TNN | Dec 10, 2011, 12.50AM IST
The admission of the mistake overshadowed the other bad news of exports growing by only 4.2% to $22.3 billion in November. With imports growing at 29% to $35.9 billion, there was no moderation in the trade deficit, which was estimated at $13.6bn.
With exports for April-October lower than initial estimates, the trade deficit expanded by another $9 billion. “How many people would come and tell you, ‘OK we goofed’? There was a mistake.. There is no shame in admitting that there is something wrong,” said commerce secretary Rahul Khullar.
So, what went wrong? There was a brief period when the software upgrade even affected functioning at ports. Besides, several erroneous entries were made as a product is classified by an eight-digit code.
As a result, data on engineering exports was inflated by around $15 billion, while export of gems and jewellery and petroleum products was underestimated by $12 billion.
Although the government admitted to making an error mid-way through the year, data revision is not a new phenomenon. It largely goes unnoticed as there is a huge lag between the time provisional numbers are made public and by the time the data is finalized.
For instance, the government had revised upwards the export numbers for 2008-09 from $169 billion, estimated originally, to $185 billion. Similarly, imports too were found to be $15 billion higher than the provisional numbers of $288 billion. In 2009-10, exports finally turned out to be $2 billion higher at $179 billion.
But this year, research houses and brokerages have been putting out reports suggesting that the government has been overestimating export data, something the government has denied all along. “The notion that the government is deliberately cooking up and telling lies has got to stop,” Khullar said.
Even after admitting the error, the commerce secretary said the broad trends remain the same. According to the latest available numbers, exports rose 33% to $192.7 billion during April-November, while imports went up 30% to $309.5 billion, resulting in a trade deficit of $116.8 billion.
According to the government’s estimate, exports may just touch the $300 billion target for 2011-12. The bigger worry is that trade deficit may cross the $150 billion mark by March when the year closes.
“The downward revision is more in line with the weak performance of the manufacturing sector,” said DK Joshi, chief economist at rating agency Crisil.
Following the correction, engineering exports, which were seen as a shining star for the past several months, lost their sheen with the overall growth moderating to 20.3% although with shipments between April and November valued at $40.7 billion, the sector still accounts for over 20% of India’s exports.
The engineering sector’s loss is petroleum’s gain. The provisional numbers for the first nine months of the year estimated exports at $30.5 billion, a rise of 62% over last year. Gems and jewellery exports too grew 56% to $30 billion.