For Revision of Errors From Trade Data, New Setup is Planned
Date : January 28, 2012
Number of Views : 153
The Commerce Department is mulling an institutional mechanism for revising trade data to improve accuracy after the recent downward revision in exports numbers by $9 billion for April-October 2011 raised serious credibility issues.
Under the proposed mechanism, the revision would be done by the directorate general of commercial intelligence and statistics (DGCI&S), the commerce department arm that collates trade data, using its own data base.
"We are thinking about setting up a revision mechanism by the end of the year," commerce secretary said, adding that the idea was still being discussed. He said the revision would be done by DGCI&S and not by cross-checking data with other institutions that collect trade data such as RBI.
The Commerce Department could come out with quick estimates of trade figures based on the data that flows in from ports and it could revise the data after cross-checking the numbers with every port to ensure that there was no double counting or exclusion, another official explained.
The data error that led to a downward revision in exports numbers was attributed to certain omissions and double counting by officials at the ports. This had raised a lot of eyebrows as economists and other stakeholders were already questioning the high export figures announced initially as they were not in tune with the manufacturing data.
Exports had grown at nearly 46% in April-October 2011 from a year ago, prompting concerns of overinvoicing. A panel of officials that included Chief Economic Advisor Kaushik Basu, Director General of Foreign Trade and Statistics Secretary met at the DGCI&S office recently to scrutinise the numbers and felt that there was a need to come out with a paper pinpointing where things had gone wrong.
One reason for wrong data collation is the manual entry of data at some ports which is necessitated because of the duty structure of certain goods. "There are certain items such as iron ore where the duties differ based on slight differences in quality that can be checked and recorded only manually," said the Statistics Secretary.
Such items may have the same code number but attract different duties, making an electronic recording impossible. The volume of such items may not be much but these are high-value goods that could affect total numbers if calculated wrongly.
If the initial recording of such data is not accurate, the Commerce Department could take its time and come up with better numbers after announcing the quick estimates.
"It is basically a trade-off between timeliness and accuracy. Sometimes it is important to get timely data to make policy corrections during difficult situations such as a global slowdown. However, it is also important to maintain accuracy which can be taken care of with a periodic data revision," the official said.
Gross Domestic Product, or GDP, numbers are also revised periodically to give a better picture of the performance of various sectors.
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