India over-counted its gold imports for every single month of the current financial year up to November with cumulative over-reporting to the tune of $11.73 billion or 31% in the first eight months. This was revealed in a review triggered by a sharp, inexplicable spike in imports of the yellow metal in November.
According to the revised data published by the Directorate General of Commercial Intelligence and Statistics (DGCIS) on Wednesday, the maximum over-reporting was for November, with the figure being revised downward by $ 5 billion to $ 9.84 billion. For other months, the gap between the initial and revised estimates range from $ 2.44 billion to $16 million.
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As per data released by the commerce ministry earlier, merchandise trade deficit touched an all-time high of $37.84 billion in November, which was much higher than forecasts. To be sure, the average monthly trade deficit in April-October period was just $23.5 billion. Though the DGCIS has reported the revised figures now, the government is yet to reconcile these in the trade data. Sources said this would be done soon.
Following the November trade figures, forecasts of the current account balance for October-December quarter have got revised. These revisions – roughly from a range of 2% to 2.6-2.8% – are now likely to be reviewed by analysts. India’s current account deficit (CAD) in Q2FY25 shrunk marginally to 1.2% of GDP from 1.3% in Q2FY24 primarily due to rise in services exports, the Reserve Bank of India (RBI) reported late last month.
When reports first emerged that the government might have overstated the figures for November by as much as 50%, the ministry of commerce asked the DGCIS to conduct a detailed examination of the gold import data and reconcile it with with data from the Central Board of Indirect Taxes & Customs (CBIC).While there is no official word on what could have led to the error, reports suggested that officials double-counted gold shipments in warehouses following a change in methodology in July.
Though the massive revision is source for embarrassment for the government, the big drop in merchandise deficit will come as a big sigh of relief to the policy makers who are grappling with the rapidly depreciating rupee against the dollar.
During Wednesday trading the rupee settled at a record low of Rs 85.87 to a dollar amidst the rising crude oil prices.
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