Commerce Secretary Rahul Khullar discussed October trade figures with journalists on Tuesday (November 8, 2011). The numbers were not at all encouraging – exports grew by a mere 12.4% YoY (to $19.9 billion), but imports were higher (at $39.5 billion), leaving a trade deficit of $19.6 billion, the worst in many, many years. Different newspapers have reported Mr Khullar’s briefing differently. While The Economic Times reported that imports had increased by 36.7% (read here), both newspaper Mint and wire agency Bloomberg Businessweek reported that the YoY imports growth rate for October was 21.7% (read here and here). But, soon thereafter, both Mint and Bloomberg disagreed on how bad it was – Mint said it was the worst trade deficit in any month in the past four years, but Bloomberg Businessweek contended that this was the biggest gap since April 1994. Even The Financial Times weighed in (read here)
But, we digress. The press briefing raises two important issues.
1. At the beginning of every month, the Ministry for Commerce and Industry releases official trade figures. For instance, on November 1, it released trade data for September through an official press release. Then, exactly a week later, on November 8, came the provisional October numbers via Mr Khullar’s briefing. But, this data seems to be missing from the ministry website. The question that arises now is: how are we to treat this data? The press release available on the PIB website says: “Dr Khullar informed that these figures are provisional and are likely to change.”
This is a monthly affair. While there is no doubt that timely information is always helpful and provides an early trend indicator, this data should be available on the ministry’s website. There should also be some indications about how the final figures vary from the provisional numbers.
2. The second, and more important, point is this: why have exports dipped in October? The pat answer being dished out is also a seasonal favourite: the crisis in the Euro-zone and the slow growth in USA. But then, this crisis has been continuing in both the continents for a while now and yet exports were growing by 80-120% in the preceding six months.
There have been various reports in the past trying to explain the sudden spurt in exports and some even predicted that exports growth would taper off in October. One of the reasons was the expected demise of the Deemed Export Passbook (DEPB) scheme, which was expiring on September 31. There was some speculation that exporters were front-loading a large part of their exports contracted for later in the year to try and extract maximum benefit from the dying DEPB scheme. The other speculation was that many Indians were bringing back their cash stashed abroad in tax havens, through over-invoicing of exports, before the tax sleuths discovered this hidden cache. The Economic Times carried a story (read here) about how exports to Bahamas had shot up from $22 million three years ago to over $2 billion this year.
However, surprisingly, nobody seems to be asking why was there such an unprecedented spurt in exports when the rest of the global markets were in a funk? One lengthy interview of Mr Khullar by CNBC-TV (read it here) seems to ignore the issue completely. Especially, since principal adviser to Planning Commission and former Chief Statistician Pranab Sen recently fretted about how the buoyant export numbers of April-August did not seem to jive with the torpid industrial production data for those months. It is logical that if there is a pick-up in exports, some of that will definitely reflect in the industrial production data.
When exports were growing at counter-intuitive rates, an explanation was indeed forwarded: that India had successfully diversified both the basket of the goods exported (by including more value-added products) and by diversifying the markets away from the developed economies of USA and Europe in favour of South America and Africa. How come that doesn’t hold good now? How has that changed so soon? Can we have some time series data on the volume and value of goods exported to South American and African countries, please?
A veil of mist continues to shroud, and bedevil, official economic data in India.