Pointing out a huge mismatch between the official and the company-reported figures for India’s exports and FII inflows, a research report has raised concerns over the possibility of illicit funds entering the country through these routes.

An analysis of exports from India and FII (foreign institutional investor) inflows into the country shows “wide gaps” between the official data and the figures reported by companies and foreign funds, leading brokerage and equity research firm Kotak Institutional Equities said in a report.

The study found that the official export growth data for the financial year 2010-11 was much higher than the figures reported by the country’s top-500 listed companies for the same period in their annual reports.

At the same time, the official data for FII inflows during the same year was also much higher than those reported by the large and listed foreign funds globally.

The Kotak study found that the official data showed export of engineering goods rising by 79 per cent during FY2010—11, while the engineering companies from the BSE—500 companies reported an increase of only 11 per cent in their exports for the same year.

“Our observation holds true for the past few years too,” it said.

On the FII front, the study found that the official data showed inflow of $22 billion in FY 2010—11, but the inflow reported by the listed FIIs and ETFs (Exchange Traded Funds) and estimates of EPFR Global (a global fund flow database) account for only $4.5 billion.

While these figures do not capture all the sources of FII inflow, such as those from sovereign and private equity funds, “nonetheless, the difference is stark,” the report said.

Noting that some gap could be due to data limitations, the report said that a better clarity on these figures data was critical to fully appreciate the drivers for exports and implications for forex reserves and “to mitigate risks to the Indian economy from illicit foreign funds, if any“.

The report pointed out that the gap between the surge in exports as per official data and a more muted performance of the listed entities would suggest towards either the exports being largely driven by smaller and unlisted entities or the data quality being “suspect“.

For FII figures, the report said, a greater level of disclosure was needed to counter potential concerns like influx of black money from foreign accounts of Indians and that of “round—tripped money from Indian companies.”

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