New industrial output index faces delay

The DIPP is not yet ready to provide data for the new index on an ongoing basis.

A more accurate index to measure the country's industrial growth has been ready for over two months now. However, it has not been put to use only because the two key government departments concerned have not been able to resolve their differences over data collection.

ABOUT IIP

India's IIP covers only three sectors of industry "" mining and quarrying, manufacturing, and electricity. These sectors have been assigned a weight of 10.47 per cent, 79.36 per cent and 10.17 per cent, respectively

The CSO's main source agencies for production data are the DIPP, Indian Bureau of Mines, Nagpur, Development Commissioner Small Scale Sector (DCSSI), Central Electricity Authority and the railways

The new "time series" for the Index of Industrial Production (IIP) will compare the growth rate of a host of products over the base year of 1999-2000. The existing base year is 1993-94. In addition, the new index is expected to include 886 items, compared with the 543 at present.

The new list of items reflects new patterns of industrial activity and consumption behaviour. So, while mobile phones have been included, items like typewriters, which are no longer used extensively, have been removed.

Doubts have been raised in recent past over the accuracy of the IIP data, especially in capturing the production of consumer durables, among others.

The new index is expected to address these concerns.

However, its implementation has been delayed as the Central Statistical Organisation (CSO), which is responsible for compiling and announcing the index every month, and the Department of Industrial Policy and Promotion (DIPP) in the Ministry of Commerce and Industry, have not reached an agreement over data collection.

"The new series was approved by the National Statistical Commission headed by Suresh Tendulkar some two months back. We were planning to release the IIP data based on the new series from this January. However, the new index has not taken off as the DIPP is not yet ready to provide data for the new index on an ongoing basis," said a Ministry of Statistics and Programme Implementation official.

In response, a DIPP official said it was unfair to blame only the department. "Although we are the largest data provider, the department is only one of the 15 agencies who source and provide data for the IIP," he said, adding that the department was on the job and closely watching the new products in the new series.

The DIPP official said effectively collecting data regularly and maintaining accuracy was a challenge. In 2002, the department outsourced data collection to the Centre for Monitoring Indian Economy.

However, the agreement ended last November. Since then, companies have been sending data directly to the government.