RBI Leans On Commerce Department For Export Figures Close.

NEW DELHI: Exports data from the Reserve Bank of India (RBI) may not be more reliable than the commerce ministry's revision-prone figures, as it does not report actual exports realisation.

The central bank compiles exports data on actual realisation basis, but does not report it. Instead, it puts out numbers compiled by the Directorate General of Commercial Intelligence and Statistics (DGCI&S), a department of the commerce ministry, and the difference between the two is accounted under the 'other capital' in the capital account.

On December 30, the RBI revised its export figures down by $6 billion in its balance of payments statement for the first quarter of fiscal 2011-12, drawing flak from experts.

"As per the balance of payments manual, IMF, which sets out the best international practices and which all member countries are supposed to follow, exports are to be recorded in balance of payments on shipments basis and not on the basis of realisation of exports," an RBI spokesperson said, adding that the DGCI&S data gives exports based on shipment basis.

The RBI's data revision followed an admission by the commerce ministry in December that it had overstated export estimates for the April-October period by $9 billion. The ministry uses data provided by the DGCI&S.

An official of the DGCI&S, who was involved with the revision, said the revised numbers were no better than the original.

"Only the exports that have some element of duty involved are checked closely. Exports that do not claim duty refunds are recorded as reported by the exporter," he said, adding, "There is rampant over invoicing."

The ministry's downward revision of its exports figures had opened a $7 billion gap between its own and the RBI's figures for the April-June quarter, sparking fears of a large-scale over invoicing and bolstering the belief that RBI's data was more accurate and based on payments. But the RBI revised its own figures down by $6 billion within a month, which, the spokesperson said, was in keeping with accounting norms.

She explained that the initial figures reported by the RBI were different as it made its original calculations using a system called FETERS (foreign exchange transactions reporting system) whereby authorised dealers in foreign exchange report to the central bank on a fortnightly basis the receipts and payments of foreign exchange broken down into various purposes, including exports.

The difference between the RBI and DGCI&S data is then recorded under 'capital account' to imply either exports to be realised later or excess receipts over those on shipment basis, as the case may be, the official added.

The RBI admitted that such a wide difference had never been recorded in the past, and that the DGCI&S needed to pull up its socks. "The DGCI&S has to take steps. They are seized of the matter," the RBI official said.

Although the RBI revised its exports figures down for the June quarter, the adjustment does not show up under 'other capital'. Instead, there is a nearly $3 billion rise in services exports for the first quarter, and minor adjustments under other heads.

Experts question the data collection exercise of both the RBI and the DGCI&S. "There is a serious accounting flaw even at the RBI's end. You cannot adjust a current account transaction against capital account," said Biswajit Dhar, director-general, Research and Information System for developing countries.

FIEO director-general Ajay Sahai said the data given out by the RBI and the DGCI&S are based on different methodologies and ideally should not be compared at all. "Frankly, I feel there is no use in comparing the two data."

Source : economictimes.indiatimes.com