Export goofs-ups: Sharma's ministry needs a CAG audit

It is not only the Sangh Parivar or the Left that want to rewrite history. The commerce ministry wants to rewrite India’s recent export history by changing the numbers for 2010-11 after have done so for the current financial year (2011-12) last month.

According to a report in The Economic Times , “an embarrassed government is likely to lower export numbers for 2010-11 as part of a clean-up drive.” If this is done, it would be the second time Anand Sharma’s commerce ministry will be fiddling with export numbers.

One, therefore, wonders whether the operative word should be clean-up or cover-up, because it was just a month ago that Commerce Secretary Rahul Khullar announced with minimal fuss that “mistakes take place.”

At that time, Khullar had attributed the mistakes to a computer crash, data misclassification and wrong entries after a new software was introduced. As Firstpost reported then, Khullar assured the world: “This notion that the government is deliberately cooking up (data) and telling you lies has got to stop.”

[caption id=“attachment_196515” align=“alignleft” width=“380” caption=“The commerce ministry wants to rewrite India’s recent export history by changing the numbers for 2010-11 after have done so for the current financial year (2011-12) last month.Reuters”] [/caption]

Well, Khullar’s assurance then does not square up with what is being proposed now: if the ministry has nothing to hide why did the entire clean-up not happen in one go? Why did the ministry not correct the data errors when the new software was introduced in 2010-11, instead of just revising this year’s export data?

To correct the mistake, the ministry revised the April-October export numbers for 2011-12 down by $9.4 billion in December.

Well, as we pointed out then, the real mistakes were much larger, for $9.4 billion is only the net error figure. “For example, the figures given out 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.”

We had also pointed out then that the bigger errors might actually relate to the previous year, where a Kotak report of October 2011 flagged the huge discrepancy between the export data reported by the commerce ministry and the figures disclosed by 500 big companies. Said Kotak: “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.”

To be sure, the commerce ministry latest attempt to start revising its data - assuming The Economic Times report is true - is a step in the right direction.

However, the authenticity of the numbers will remain in doubt if the commerce ministry does this exercise all by itself.

When a humongous goof-up happens on your watch, the only way to ensure credibility is to let an outside agency like the Comptroller and Auditor General (CAG) to audit the data collection and compilation process. Otherwise who can know if even the current data will go wrong next year?

What we need is a comprehensive clean-up where a group comprising members from the commerce ministry, the Directorate General of Commercial Intelligence and Statistics (DGCIS), and the Reserve Bank of India audits the whole process and then comes up with an explanation for the goof-ups in Anand Sharma’s ministry.

There is an easy way to check if the export goof-ups were merely the result of data glitches or point to some kind of overinvoicing scandal. Every figure for 2010-11 and 2011-12 can be matched with the actual receipts registered by the Reserve Bank of India. There is also a need to look deeper into the companies that reported the high export numbers and check their antecedents and linkages.

The clean-up is not the job of merely the commerce ministry. It has to involve the Central Bureau of Investigation and the CAG as well.