India’s Record November Gold Imports Likely Due to Calculation Error: Report

India’s record imports of gold last month were reportedly due to a calculation error. The Indian government is reviewing the surge in gold imports that has led to a widening of India’s trade deficit.

According to a report in Bloomberg, the increase in gold imports that pushed the rupee to an all-time low was due to a miscalculation. The report said that officials counted gold shipments in warehouses twice. The data could have been overestimated by as much as 50 tons in November, representing about 30 percent of total gold imports that month.

Meanwhile, Reuters reported that India’s Directorate General of Business Intelligence and Statistics has conducted a “detailed examination of gold import data and reconciliation will be done with the data” received by the tax department.

Trade numbers will likely be revised if an error is identified, and traders can expect a correction in the foreign exchange rate. Moreover, it could also allay concerns about the state of the economy raised by the data, the report said.

India’s trade deficit rose to $37.8 billion in November, driven by an increase in gold imports to a record $14.8 billion from just $3.44 billion a year ago. Although gold imports gradually increased, the unprecedented rise stunned analysts.

The report said officials were likely to have added imports held by custodians in free trade zone warehouses with numbers reported by local banks that buy gold from custodians. Gold is not considered imported until it is withdrawn from the warehouse.

The report added that total gold imports may still be in the range of 800-1,000 tons that India ships annually.