India’s industry may have grown by 9.2% in the six months to September, but efforts to make this measure representative of industrial activity in the country have gone nowhere—two months after the country’s ministry of statistics announced the launch of an updated Index of Industrial Production, or IIP, there is no sign of the update, and government officials said it could be available only by March.
IIP measures industrial growth—the government publishes this data every month—but India badly needs a new measure. The current index measures growth using 1993-94 as a base: IIP for that year was taken as 100, and growth of various industries, depending on the weightage assigned to them, was added on to this every year. The Septmber value of IIP was 259.1.
The problem with this, said government officials who do not wish to be identified, is that it does not account for the emergence of new sectors. And it includes or assigns high weightages to industry sectors that are either no longer relevant or are not as important as they once were.
The officials said that because of these factors, IIP might be underestimating actual industrial growth.
For instance, typewriters have a higher weight of 0.2843 in the IIP than window air conditioners, which have only 0.1268. Over the past 14 years, production and sales of typewriters have declined to almost nothing, while those of air conditioners have soared.
Not counted: Production in relatively new items such as LCD television sets and microwave ovens are not taken into account while video cassette recorders and black and white television sets are when computing IIP.
The new index proposed by the ministry of statistics uses 1999-2000 as a base. And it will use wider and newer industries from the revised NIC (National Industrial Classification) 2004, a classification of industries in the country, according to a senior official in the Central Statistical Organisation (CSO), which is part of the ministry. The official asked not to be identified because the new index has still not been approved.
A government official, who did not wish to be identified, said the delay was because the industry ministry is yet to finalize the data collection mechanism for the new data that will be required for the index.
Fifteen source agencies, including various ministries, are required to furnish data to CSO within four-five weeks from the reference month.
Assuming the data is made available to CSO in January, the index, which is published with a six-week lag, will be available in mid-March, the official said.
“If we get an assurance about the data collection today, we can roll out the new IIP next month,” said India’s chief statistician and secretary in the ministry of statistics and programme implementation, Pronab Sen.