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The composition of products basket in the revised series of Index of Industrial Production (IIP) is different from what the country had earlier, former Chief Statistician Pronab Sen said on Monday.
The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, revised the base year of the macroeconomic indicators, as a regular exercise, to capture structural changes in the economy and improve the quality and representativeness of the indices.
In this direction, the base year of the all-India Index of Industrial Production (IIP) has also been revised from 2004-05 to 2011-12 to not only reflect the changes in the industrial sector but to also align it with the base year of other macroeconomic indicators like the Gross Domestic Product (GDP), Wholesale Price Index (WPI).
"As far as the IIP is concerned, there really have been no major changes except in terms of the coverage. The coverage has been widened very significantly. Everybody is making out how much increase in the number of products that are covered.
"People miss out on the number of products that have been dropped. So if you look at the composition of the basket is actually significantly different from what we had earlier. This is something all we expected," Sen said.
He said that from 2004 till 2011, India's industrial structure had the highest growth ever that was not getting reflected in the IIP figures.
"That is a real change that has happened in IIP," he told BTVi in an interview.
Sen said volatility coming out of the capital goods sector often exists because of the nature of the sector.
"One of recommendation of the expert committee was instead of measuring the final output, we should be measuring work in progress so that we can capture the process of production rather than completion of a particular product. This will hopefully reduce the volatility," he said.
With the release of the new series of IIP (base 2011-12), an institutional mechanism has been established for facilitating dynamic revision of the item list of products and the panel of factories, through a Technical Review Committee, chaired by Secretary, Ministry of Statistics and Programme Implementation.
This Committee will meet at least once a year for identifying new items that need to be included in the item basket and removing those that have lost its relevance in the industrial sector or are no longer being produced.
IIP in the revised series will continue to represent the Mining, Manufacturing and Electricity sectors. The revised series uses the National Industrial Classification (NIC) 2008 for the purpose of classification of industrial production.