India plans seasonal adjustment for industrial output in data revamp

India's statistics ministry has proposed introducing a seasonally adjusted version of its closely watched Index of Industrial Production (IIP) data ‍to reduce the impact of ​shifting festivals such as Diwali on monthly readings.

IIP data includes output data from various sectors such as manufacturing, mining, electricity generation, output of capital goods, among others.

India currently publishes only raw, unadjusted monthly data, which can be heavily distorted by seasonal patterns, shifting festival dates and differences in working days. The data is often revised ​to account for these disruptions.

A discussion paper from the ministry, released on Wednesday, said using a new methodology could improve economic signals without causing excessive revisions.

 

Under the proposal, the ministry would strip out predictable patterns from monthly industrial data, separating underlying trends from temporary fluctuations and irregular shocks before publishing adjusted figures.

The proposal is part of a broader federal push to overhaul key economic data series by revising base years and updating methods to better match the current economic structure. The base year for IIP data is due to be revised to 2022-23 in May, from 2011-12.

"Many official statistical agencies are now disseminating seasonally adjusted IIP series in light of an increasing demand for such data and also in view of the multilateral institutions ‌making explicit recommendations in favour of this ​practice," the paper said.

The ministry has invited stakeholder feedback by February 12 on the proposed methodology, the treatment of COVID-era disruptions and which holidays to include in the adjustments, signalling a step towards aligning India's industrial data with global practices.

Previously, the ‍ministry has proposed overhauling the index, including replacing closed factories in the survey sample with active units to improve accuracy, and considering more frequent, possibly ‍annual, ‌revisions to sector ​weights to better reflect shifts in the country's industrial ‍structure.

India's latest IIP data showed industrial output rose at its fastest pace in more ‍than ‍two years in ‌December at 7.8 per cent , against November's revised 7.2 per cent .