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Dubious cotton data in RBI’s annual report
The Reserve Bank of India (RBI) has once again purveyed in its annual report
for 2003-04, dubious cotton production statistics surprising almost every one
who is interested in such information. This is bound to affect the report’s
credibility.
Most economists, bankers, research orgnisations, teachers in educational institutions
as well as students, take it for granted that all information in the RBI’s
annual report is authentic and reliable. If, however, they turn their eyes to
the questionable cotton production statistics given in the annual report for
2003-04, they are bound to be shocked. For, the report has given out cotton
production statistics which are far from reliable. The RBI officials concerned
have not taken the trouble to rectify the statistics for the previous years,
even as this would not have been very difficult.
The RBI’s annual report which was released on August 30, 2004 shows that
the cotton crop in the country in 2003-04 would be around 138 lakh bales of
170 kg each (page 252). On the other hand, reports published in newspapers much
before that date had indicated that actual arrivals of cotton had reached 175
lakh bales by the end of July 2004. Had the RBI paid attention to these reports,
it could have easily avoided giving misleading information that the cotton crop
in 2003-04 was going to be of the order of 138 lakh bales for the actual crop
can never be lower than actual arrivals of the commodity.
Assuming that the RBI might not have considered these newspaper reports reliable,
it could have at least obtained such information from the cotton ginning and
pressing factories in the country. Even the East india Cotton Association and
other organisations are able to get such information from these ginning and
pressing factories. It should, therefore, be not difficult for the RBI to obtain
such information from them. It cannot convincingly argue that its information
about cotton crop are received from the agriculture ministry and that it is
presumed to be reliable.
What is even more shocking is the fact that RBI officials have included in the
annual report statistics of even earlier years’ cotton production without
trying to verify them. If one goes by the annual report, cotton production in
the country was of the order of 115 lakh bales in 1999-2000, 95 lakh bales in
2000-01 and 87 lakh ales in 2002-03. All these statistics are dubious because
they are all far lower then actual receipts of cotton in those seasons. One
can easily find out the figures of such actual receipts of cotton in those seasons
from the annual report of the Union ministry of textile or from The Indian Cotton:
A Profile 2003-04, published by the state owned Cotton Corporation of India
(CCI). The RBI cannot thus convincingly argue that it was not possible for it
to get information of actual receipts of cotton in the earlier years. Had it
tried to get such information, it could have easily done so.
The RBI cannot be unaware of the fact that the International Cotton Advisory
Committee (ICAC) as well as the US Agricultural Department (USAD) which keep
a very close eye on the production, movement and consumption of cotton through
out the world, does not attach any importance to the cotton production statistics
given out by te Union agriculture ministry, though the RBI prefers to cling
to them. Particularly, when it can be proved beyond doubt that the agriculture
ministry’s statistics on the subject are apparently questionable.
The RBI has two options if it wants to improve reliability of its information
in this regard. One way is to verify the information coming to it with the agriculture
ministry before putting the same in its publication. Another option available
is to go by the information available from the state owned Cotton Corporation
of India, whose officials visit all cotton producing centres in the country.
It might be interesting to note in this context that production statistics of
tea and coffee, respectively in the country. Therefore, there should be no reason
for not approaching the Cotton Corporation of India for this purpose. At least
it can use such information for verifying the statistics received by it from
other sources.
RBI should take into consideration the fact that its underestimates of cotton
production to some extent even might affect the calculation of GDP. Moreover,
when its information in this regard is doubtful, that is bound to create doubts
about other information carried by its annual report. It may be in the interest
of RBI therefore to ensure that all information carried by its annual report
is unquestionable.
- M D Dewani
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