MoSPI plans transition to chain-based approach for IIP data compilation

The Ministry of Statistics and Programme Implementation (MoSPI) has proposed transition towards the chain-based method of index of Industrial Production (IIP) compilation, as it is undertaking a base-revision exercise of macroeconomic data.

In the process of revising the base, the MoSPI is revisiting methodologies, exploring new data sources, and incorporating changes following comprehensive consultations with experts, academicians, users, and other stakeholders, an official statement said.

Traditionally, the IIP was compiled using a fixed-base Laspeyres framework, in which sectoral and industry weights remain unchanged until a base-year revision.

However, it stated that, with production shifts in response to demand, technological changes, and policy shifts, some industries expand, while others decline or disappear, and entirely new industries or production lines within an industry emerge.

 

Therefore, fixed weights become progressively less relevant, thereby affecting the efficacy of the indices.

The chain-based method of IIP compilation offers better accuracy by capturing these changes, allowing annual increases and decreases in weights to correctly reflect a more recent production structure.

To facilitate stakeholder engagement on this topic, the MoSPI has prepared a Discussion Paper 2.0: Adoption of Chain-Based Index of Industrial Production (IIP), which outlines the proposed methodology for chain-linked indices.

The MoSPI invites views and comments from experts, academicians, Central government ministries/ departments, state governments, financial institutions and other stakeholders on the proposed methodology.

The comments can be sent by January 25, 2026.