Accounting blunder: India corrects gold import data, trade deficit overstated

The Indian government has admitted to a significant miscalculation in its import figures for precious metals, an error that had inflated the trade deficit to a record level in November and contributed to a sharp decline in the value of the rupee.

The Ministry of Commerce and Industry acknowledged the data discrepancy on Thursday, stating that it resulted from a migration to a new data transmission system.

Revised import figures reveal a significant overstatement

The ministry stated that it revised import figures from April to November after discovering the miscalculation.

Preliminary estimates released earlier this week had suggested gold imports for November totaled $9.84 billion, nearly $5 billion lower than what had been previously reported.

The ministry also stated that it is still in the process of fully reconciling the data, as reported by Bloomberg.

This revelation follows an "unusual surge" in precious metal imports reported in November, which had raised red flags and prompted scrutiny of the figures.

The initial miscalculation led to a four-fold increase in gold imports, which reached a record high of $14.8 billion in November.

This artificially inflated figure caused India’s trade deficit to widen to $37.8 billion.

While gold imports have been steadily increasing since the government reduced duties on the precious metal to 6% from 15% in the July budget, the sharp spike had baffled analysts and raised concerns about the reliability of the figures.

Based on Bloomberg’s calculation using the preliminary revisions available, India’s trade deficit for November was $31.83 billion.

Data revisions and limited impact on the rupee

The ministry stated that it regularly revises its figures "from time to time" based on "data that’s received late, amendments in the respective months and qualitative corrections wherever required."

Preliminary revisions show that gold imports for the April-November period were $37.39 billion, down $11.7 billion from previously reported.

Economists believe the revisions will result in a narrower current account deficit, but are not expected to have a significant impact on the local currency.

While the Indian rupee may experience further weakness due to a stronger US dollar, it is still expected to “outperform” other currencies in Asia’s emerging markets in 2025.