The broad sense which prevails today is that India's macro-economic numbers are in good shape. The fiscal deficit has shrunk from a combined centre-state total of more than 10 per cent of GDP some years ago to barely 5 per cent this year--the lowest level since the mid-1980s. The (wholesale) inflation rate has dropped to 4.4 per cent, down sharply from 6.5 per cent just four months ago.

And while the export growth rate has dipped and the trade/current account deficit has grown, the strong capital inflows are more than enough to cover the gap, and then some--if anything, it has become a problem of plenty.

Comforting as these numbers are, they may be over-stating the good news. The 'Economic Outlook for 2007-08', submitted two weeks ago by the economic advisory council to the Prime Minister, points to some of the problems.

First, the provisional wholesale index numbers get corrected upwards in the final numbers, typically in recent weeks by 0.3 percentage points. In addition, the petrol and diesel price cuts announced in the second half of 2006-07 have to be reversed as global oil prices have climbed since then; if that is done, it would add another 0.3 percentage points to inflation, taking the latest WPI inflation rate to 5 per cent.

That is not out of line, but it is not the 4.1 per cent that was officially announced earlier this month, and leaves less of a cushion than the Reserve Bank may like as it prepares to make its next monetary policy announcement on Tuesday.

Take then the fiscal deficit. The officially stated numbers put the figure for this year at 5.2 per cent for the central and state governments combined.

But as the council has pointed out, this leaves out large, off-balance sheet items, which properly speaking should be taken into the reckoning.

If you include the oil bonds (issued to the state-owned oil-marketing companies in lieu of petrol-diesel price increases, so that they do not run out of cash), the securities issued to the Food Corporation of India and the arrears on fertiliser subsidies that have not been provided for in the Budget, as also the losses of public sector companies owned by state governments, the figure balloons by 2 per cent of GDP, to 7.2 per cent--which does not sound like great news at all. That would also mean that, in a correct accounting sense, the Centre is not meeting the targets stipulated in the fiscal responsibility law.

The third bit of bad news has been  pointed out by our columnist, AV Rajwade, who has spotted the fact that the Reserve Bank does not take short-term trade credits into account when calculating the trade deficit (based on payments made).

By Mr Rajwade's calculation, this may now total as much as $50 billion, of which perhaps $10 billion was the net addition last year. That would take the current account deficit from the comfort zone of 1.5 per cent of GDP to the riskier 2.5 per cent, on top of which there would be the instability factor if the level of short-term credit is $62 billion, and not the $12 billion that is officially stated.

The level of forex reserves is enough to cover any risk, but the room for instability in the currency market is greater than generally assumed.

In other words, the macro-economic numbers put out by the official statistical systems do not capture the full underlying reality because of a variety of accounting fudges (conventions, if you will) and delayed decisions.

Taken in its totality, therefore, the economy is not in the fine balance that the reported numbers suggest. Awareness of this should help both those in the government and the observers outside it to get rid of the complacency that has settled in with regard to the assumed quality of macro-economic management.

The government should be spending less, especially on programmes that do not deliver enough bang for buck, urgently required pricing decisions should not be postponed indefinitely, and there should be sharper focus on the issues that will help improve India's trade competitiveness.

There is work to be done here.