IIP revamp report likely by February
Suggestions include doubling items for consideration and changing base year to FY10
 "IIP revamp report likely by February")
India’s bellwether measure of industrial output, the Index of Industrial Production (IIP), could see a comprehensive overhaul — more than double the number of items in the basket, a reclassification of products and an altogether new base.
For instance, tomato sauce is not a separate entity in the current IIP; chilli sauce is. Production from big shipbuilding yards such as Pipavav is not counted. Cotton ginning is not part of IIP. All these anomalies will be corrected in the new IIP, to have 2009-10 as the new base year against the current 2004-05. Besides, guidelines will be framed to switch over to a newer base of 2011-12, once enough data is in.
A high-powered committee constituted by the government under the chairmanship of Planning Commission member Saumitra Chaudhuri has almost finalised its recommendations on revamping the IIP. “The final report is almost ready and expected by February,” Chaudhuri told Business Standard. Officials said the committee found massive under-reporting in the IIP, obsolete data and faulty classification.
The panel is likely to recommend that the basket of items for calculating IIP be more than doubled from the existing 800-odd items.
The previous revision was in June 2011, where the base was changed to 2004-05 from 1993-94. In the revision, the number of item groups in the manufacturing sector had gone up from 473 to 620, while that in mining had come down from 64 to 61. The weight of manufacturing in the 2004-05 index was brought down to 75.53 per cent from 79.36 per cent in the 1993-94 base year IIP. The weight of mining went up to 14.15 per cent from 10.47 per cent. So also the weight of electricity, from 10.17 per cent to 10.32 per cent.
The present panel is the first one to be headed by a person outside the ministry of statistics and programme implementation (MoSPI) to look into IIP restructuring. MoSPI comes out with IIP data, sourced from various departments and ministries.
A source said the committee will also suggest a mechanism for sustainable inclusion. “The sample used for collecting data should have some reserve mechanism, so that even if one or two units close down, the index value does not fall,” the official said.
Officials said the committee also found that in many cases, sales data were reported and not production, which needs to be corrected. “There are many other anomalies — one item is represented eight times but some do not even find a single mention. All these will be corrected,” said one.
The new IIP will have 2009-10 as its base year but will provide sufficient guidelines to automatically migrate to a 2011-12 base as soon as new sets of information are available. “The committee will recommend a sufficient framework to update the weights to a new base,” said Chaudhuri.
MoSPI will vet the report and then prepare a Cabinet note. “We feel that it could take almost a year to establish the new system after adoption by MoSPI,” an official said.
For instance, tomato sauce is not a separate entity in the current IIP; chilli sauce is. Production from big shipbuilding yards such as Pipavav is not counted. Cotton ginning is not part of IIP. All these anomalies will be corrected in the new IIP, to have 2009-10 as the new base year against the current 2004-05. Besides, guidelines will be framed to switch over to a newer base of 2011-12, once enough data is in.
A high-powered committee constituted by the government under the chairmanship of Planning Commission member Saumitra Chaudhuri has almost finalised its recommendations on revamping the IIP. “The final report is almost ready and expected by February,” Chaudhuri told Business Standard. Officials said the committee found massive under-reporting in the IIP, obsolete data and faulty classification.
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The panel is likely to recommend that the basket of items for calculating IIP be more than doubled from the existing 800-odd items.
The previous revision was in June 2011, where the base was changed to 2004-05 from 1993-94. In the revision, the number of item groups in the manufacturing sector had gone up from 473 to 620, while that in mining had come down from 64 to 61. The weight of manufacturing in the 2004-05 index was brought down to 75.53 per cent from 79.36 per cent in the 1993-94 base year IIP. The weight of mining went up to 14.15 per cent from 10.47 per cent. So also the weight of electricity, from 10.17 per cent to 10.32 per cent.
The present panel is the first one to be headed by a person outside the ministry of statistics and programme implementation (MoSPI) to look into IIP restructuring. MoSPI comes out with IIP data, sourced from various departments and ministries.
A source said the committee will also suggest a mechanism for sustainable inclusion. “The sample used for collecting data should have some reserve mechanism, so that even if one or two units close down, the index value does not fall,” the official said.
Officials said the committee also found that in many cases, sales data were reported and not production, which needs to be corrected. “There are many other anomalies — one item is represented eight times but some do not even find a single mention. All these will be corrected,” said one.
The new IIP will have 2009-10 as its base year but will provide sufficient guidelines to automatically migrate to a 2011-12 base as soon as new sets of information are available. “The committee will recommend a sufficient framework to update the weights to a new base,” said Chaudhuri.
MoSPI will vet the report and then prepare a Cabinet note. “We feel that it could take almost a year to establish the new system after adoption by MoSPI,” an official said.