THE HIMALAYAN TALK: PALASH BISWAS TALKS AGAINST CASTEIST HEGEMONY IN SOUTH ASIA

THE HIMALAYAN TALK: PALASH BISWAS TALKS AGAINST CASTEIST HEGEMONY IN SOUTH ASIA INDIA AGAINST ITS OWN INDIGENOUS PEOPLES

PalahBiswas On Unique Identity No1.mpg

Monday, January 30, 2012

Black money or legitimate export dollars: The big debate

http://economictimes.indiatimes.com/news/economy/finance/black-money-or-legitimate-export-dollars-the-big-debate/articleshow/11666786.cms


Black money or legitimate export dollars: The big debate

It all seemed too good to be true. Between May and August last year, India's growth in exports rose at a dizzying pace every month. In July 2011, exports were $29.3 billion, 82% higher than a year earlier. 

Coming at a time when the world economy was widely seen to be slowing, what with unemployment in the US, and the problems in the eurozone, both key export markets for India, the export growth seemed an unexpected bonanza in an otherwise dismal economic climate. 

But serious doubts began to be raised about the numbers. There was near 80% export growth in sectors like engineering in 2010-11. And India's exports to certain tax havens didn't match the import figures reported by these countries. 

Indeed it was the jump in transaction with countries like the Bahamas (a tax haven) which raised the suspicion that exporters were showing a higher value than what they actually received for their goods to camouflage the flow of black money stashed abroad back into the country. 

The practice, known as mis-invoicing, has long been a standard practice to camouflage the movement of undisclosed cash across countries. But till recently, exporters were widely accused of under-invoicing. An exporter for instance may show Rs 5 for something that is really Rs 10, thus transferring export earnings to foreign accounts. 

What exporters are being accused of now is actually trying to bring that undisclosed money back, by showing a higher value for their exports in their accounts than the true value, and inflating the export earnings. This is in the backdrop of increased government scrutiny of wealth stashed abroad. 

There may well be errors in the export data, government officials are rechecking the numbers. Yet, there are compelling arguments to show that the export data 'scam' may not be as much of a 'scam' as earlier believed. 

Galloping export growth amidst a weak global economy. It sounds more than a little fishy. Were exporters inflating their bills to bring back money stashed abroad earlier? 

Exports in the first half of 2011-12 grew by 44-82% every month, even as the global economy was weak. But rather than exporters cooking the books, there are more benign explanations. Those extraordinarily high figures were actually revised down later on, due to 'software' problems. 

The government found a $9-billion error in export numbers reported in the April- November 2011 period due to miscalculations in the software. The revised export figures released this January show that the growth rates ranged from 23.7% to 60.8% till October. And as reported by The Economic Times earlier this week, the export numbers for 2010-11 may be revised down as well. 

But there still seems to be a problem. After all July's export growth may not be 80%, but it's still 60%. Again, amidst a slowly growing global economy, that still seems far too high. Is there a way to cross-check these figures? 
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