Saturday, May 18, 2013

CAD can get help From Cost Audit Records.


Rising CAD is a big trouble for the Indian economy which is standing at the brink of getting negative ratings on its sovereign. From prime ministers economic council to every economist of the country has been trying to figure out the way for reducing the cad and getting India back on the track of FRBM.

Rising consumption of Gold and international crude prices are being tagged as the prodigal son behind the rising CAD. But the story stands out to be different when finding out the real reason behind the CAD.

Government has ignored the real reasons behind the rising cad which has also lead to an unbalanced industrial growth. According to the Cost Accounting Record Rules 2001 the PARA 6 (Break up of cost of Input Materials imported during the year) of the same states that when an manufacturing unit consumes imported goods and the same data is being compiled to analyzed to find the same availability of the material domestically. Economists around India have not turned to this data till data otherwise they must have got the solution of the rising CAD as well as development of those areas where imported goods are being consumed by the manufacturing units.

We all know that India is now a global assembling hub which means that imported goods which are assembled and sold India. In the recent last 5 months of this year 2013 international commodity prices have come down which has given immense opportunity to the manufacturing units of India to built inventory of raw materials available at cheap valuation below the average normal prices. In my research I find that CAD is going to increase further since government has failed to analyze PARA 6 of the Cost Audit Report 2001. We cost accountants have been neglected by the government for several decades but I find its high time that government should utilize the cost accounting profession to resolve the CAD issue.

PARA 6 of the Cost Audit Report 2001 is huge beneficial to the government of India since through this report they can make those industries more competitive matching with the imported material. Coal is being one of such raw material which is being consumed through import. Government fails to understand that if the same coal is being made available domestically then it will not only reduce the CAD but bring employment and other ancillary growth of different industries.

If PARA 6 of the Cost Audit Report 2001 is being utilized ten one can block the loopholes of misusing the import segment as well as one can find the scope of development of the indigenous industries compared to the imported ones. Cost Audit Report 2001 serves an important role in various aspects where government of India can get lots of help for designing the economic growth of 8%+. The profession of cost accounting can be of great help for the Prime Minister Economic council.

1 comments:

John Joseph

very good initiative..keep it up...
we all need to look around us to find such value added areas at company,comminity and national and interantional level

Now new rules 2011 applies,though much the same requirement...
Also whether Commodity like coal whether sufficiently produced to meet the local demand?

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