New Delhi: Differences between the Central Statistical Organisation (CSO) and the Department of Industrial Policy and Promotion (DIPP) over the choice of the base year for the proposed new index of industrial production (IIP) series may trigger a further delay in the release of a new series.
The present series of IIP based on the base year 1993-94 is widely considered to be outdated and unrepresentative of the factory production pattern. This is because it includes many products that have outlived their relevance such as typewriters and does not include items whose importance have grown over the recent years such as microwave ovens and mobile phones. Even former finance minister P. Chidambaram has publicly questioned its reliability.
While CSO, the nodal agency to compile and release the IIP data is in favour of releasing a new series with the base year 1999-2000 in the interim, DIPP, which is the largest source agency for the IIP data is for moving directly to 2004-05 base year.
“The DIPP secretary is of the view that there is no point moving to 1999-2000 base year and then moving to 2004-05 base year. It is better to wait a little and move directly to 2004-05 base year. We are examing the proposal. For this the basic homework has to be done,” chief statistician of India and secretary of the Ministry of Statistics and Programme Implementation Pronab Sen said.
However, a CSO official who spoke under condition of anonymity said that the new IIP series will be delayed by “not less than one year” if it has to move to 2004-05 base year.
“We are ready with the 1999-2000 base year. And we can release the new series within two months if DIPP provides us the data now,” he added.
A senior DIPP official accepting there might be some delay if the base year is shifted to 2004-05, said, “There might be some delay. But, in 2009, a 1999-2000 base year is already outdated by 10 years. We are planning to move to 2004-05 base year for the wholesale price index (WPI). So we hope that a common base year for IIP and WPI will be more appropriate. However, a final decision has to be taken by the Cabinet.”
The official spoke under condition of anonymity.
A new series of IIP with the base year 1999-2000 though ready for over a year now could not be released due to the inability of the DIPP to collect regular factory output data.
DIPP has recently roped in private economy and corporate tracker, the Centre for Monitoring Indian Economy, or CMIE to collect such data.
However, Vyas who says it is already on the job, does not see any delay on his part due to any shift in the base year.
“Any shift in base year will require more effort. But there will be no delay from our side. We will collect the (required) information,” said Mahesh Vyas, managing director and CEO, CMIE.
NR Bhanumurthy, associate professor at the Institute of Economic Growth feels that the CSO’s argument is more logical.
“We as researchers would prefer a common base year of 2004-05 for all macro data as it makes the data more comparable. However, if CSO is ready with 1999-2000 base year, then it would be better to move to it as it would be at least more useful than the current series,” he said.