NOTE ON THE HISTORICAL DEVELOPMENT OF THE ALL INDIA INDEX OF INDUSTRIAL PRODUCTION (IIP) AND SALIENT FEATURES OF THE CURRENT SERIES OF IIP (BASE 1993-94=100)

Introduction

Index of Industrial Production (IIP) is an abstract number, the magnitude of which represents the status of production in the industrial sector for a given period of time as compared to a reference period of time It is a statistical device which enables us to arrive at a single representative figure to measure the general level of industrial activity in the economy. Strictly speaking the IIP is a short term indicator measuring industrial growth till the actual result of detailed industrial surveys become available. This indicator is of paramount importance and is being used by various organisations including Ministries/Departments of Government of India, Industrial Associations, Research Institutes and Academicians.

Origin & History

2. In India, the first official attempt to compute regularly the Index of Industrial Production was made much earlier than even the recommendations on the subject at the international level by UNSO. The Office of Economic Advisor, Ministry of Commerce and Industry made the first maiden attempt of compilation and release of Index of Industrial Production with base year 1937 covering 15 important industries accounting for more than 90% of the total production of the selected industries. Subsequently, the base year were revised twice, viz., in 1946 and 1951.With the inception of Central Statistical Organisation (CSO) in 1951, the responsibility for compilation and publication of the Index of Industrial Production (IIP) was vested with this office. The general scope of the index of industrial production as recommended by the United Nations Statistical Office (UNSO), is defined to include mining, manufacturing, construction, electricity and gas sectors. But due to constraints of the data availability, the present general index of industrial production compiled in India has in its scope mining, manufacturing and electricity only.

3. As the structure of industrial sector changes over time, it becomes necessary to revise the IIP periodically, so as to measure the real growth in the industrial sector. UNSO recommends that the base year of the IIP may be revised quinquennially. It has been revised from time to time by shifting the comparison base to a recent period, by reviewing the coverage of items and industries and by improving as far as practicable, the technique of construction with a view to reflect adequately the industrial growth and structure. When the index was commenced in India, the base year adopted was 1937 and this was revised successively to 1946, 1951, 1956, 1960, 1970 ,1980-81 and 1993-94.

Base Year : 1937

4. Initially the base year adopted was 1937 comprising mining manufacturing and electricity covering 15 industries accounting for more than 90% of the total production of these industries. The weights were allocated based on the total value of output during the base year. The index termed the Interim Index of Industrial Production was a quantum index and was computed

using weighted arithmetic average with fixed base. The various industries and their corresponding weights were as under:

Industry                            Weight

1. Cotton Textiles ...............42 

2. Jute Manufacture.............18

3. Steel................................ 8

4. Chemicals.........................1

5. Paper................................2

6. Cement.............................4

7. Matches............................2

8. Paints................................1

9. Wheat Flour.......................1

10. Distilleries and breweries....1

11. Sugar..............................10

12. Petrol................................1

13. Kerosene...........................1

14. Coal..................................4

15. Electricity..........................4

Total...................................100

The index was discontinued since 1949.

(Ref. Statistical Abstract 1952 –53)

Base Year : 1946

5. Subsequently, the base year was shifted to 1946 by the then O/o Economic Adviser, Ministry of Commerce & Industry. The scope of the index was restricted to mining and manufacturing sectors, comprising of 20 industries with 35 items. The ‘value added by manufacture’ in the base

year obtained from the First Census of Manufactures, India 1946 was used for determining the weights to be assigned to different items. In the case of coal, the gross ex-factory value at pit-head of the coal mined was taken as an estimate of value added. The industries and their respective weights are as under :-

 

Industry Weight

Coal 11.95

Sugar 3.54

Paints and Varnishes 0.61

Cement 0.67

Glass 0.55

Refractories (Ceramics) 0.48

Plywood (Commercial and Tea Chests)

0.15

Paper and paper board 1.46

Matches 1.21

Cotton Textiles 43.49

Woollen manufactures 1.38

Jute 16.53

Chemicals 3.10

Non-ferrous metals 2.14

Steel 7.16

Bicycles 0.11

Sewing machines 0.02

Electric Lamps 0.04

Electric Fans 0.35

General and Electrical Engineering 5.06

Total 100.00

(Ref. Statistical Abstract 1952-53)

6. The index, viz., Interim Index of Industrial Production from 1947, was compiled using simple weighted arithmetic mean. The adjusted indices, after allowing for variations in the number of days in the month for all industries except sugar were also compiled using suitable formulae. For sugar, the seasonal variation adjusted indices were compiled.

Base Year : 1951

7. The Interim Index of Industrial Production was discontinued in April 1956 due to certain shortcomings and was replaced by the revised index with 1951 as the base year covering 88 items compiled by CSO. The items in this index were classified according to the International Standard Industrial Classification (ISIC) 1948 of all economic activities. The various industries included in the index were categorised as 2, 17 and 1 major groups for the mining and quarrying, manufacturing and electricity sectors respectively. The index was computed using the weighted arithmetic mean of quantity relatives with weights being allotted to various items in proportion to ‘value added by manufacture’ in the base year 1951. The weights for the mining, manufacturing and electricity sectors were 7.16, 90.68 and 2.16 respectively. These indices were adjusted for variations in the number of days in the month for all the industries except for sugar, salt and tea industries. For the three seasonal industries, the seasonal variations were adjusted by the method of moving averages. The indices were compiled from 1952 to 1961 and are given in the following table.

Revised Index of Industrial Production

(BASE : 1951 = 100)

Year

(Weight)

General Index

(100.00)

Mining and Quarrying (7.16)

Manufacturing

(90.68)

Electricity

(2.16)

1952 103.6 105.6 103.4 104.5

1953 105.6 104.2 105.5 113.1

1954 112.9 107.2 113.0 127.0

1955 122.4 111.7 122.7 144.5

1956 132.6 115.0 133.3 164.1

1957 137.3 126.8 136.9 184.9

1958 139.7 133.7 138.5 209.0

1959 152.1 142.3 150.6 248.5

1960 169.7 159.9 167.9 280.5

1961 181.2 171.8 178.5 326.2

(Ref: Statistical Abstract 1962)

Base Year : 1956

8. The index was further revised to base year 1956 on the recommendation of the working group constituted by Central Statistical Organisation. The series was revised in July 1962 covering 201 items of production, classified according to the Standard Industrial and Occupational Classification of All Economic Activities published by CSO in 1962. The weights were assigned to the various items on the basis of ‘value added by manufacture’, in the base year as per Census of Manufactures 1956. The number of items alongwith sectoral weights are as follows :

Sectoral Weights and number of items in IIP with base 1956

Sector               No. of items       Weight

Mining                           2               7.47

Manufacturing             198             88.85

Electricity                       1               3.68

Total                         201            100.00

(Ref: Statistical Abstract 1963 & 1964)

9. The indices were compiled using the weighted arithmetic mean. No adjustments were made for variation in the number of days of the month and the seasonal variations were adjusted on the basis of overall indices rather than confining to only three industries viz. sugar, tea and salt. The monthly series of index numbers from January 1951 to December 1961 was the basis for estimating the seasonal indices using the method of moving averages.

Base Year : 1960

10. The index with 1960 as base year, is based on (i) regular monthly series for 312 items and (ii) annual series including 124 additional items as compared to 201 items covered by the

earlier index (base : 1956=100). Though the published index is based on regular monthly series for 312 items, weights have been allotted on the basis of the total 436 items with a view to use the same set of weights for the regular monthly index and the annual index covering the additional items as well. If any item, for which regular monthly series are not available, occurs in a group, the weight of that group, is adjusted by dropping the weight of that item, while calculating the monthly group index. No such adjustment in weight is made while computing the major group index for such groups. The crude general index of every month is adjusted for seasonality by appropriate seasonal index calculated by using the method of moving averages of the crude general index. The index is a simple weighted arithmetic mean, the weights being proportional to ‘value added by the manufacture in the base year.

11. The Mining and Quarrying index was specially worked out by the Indian          Bureau of Mines and excludes gold, salt, petroleum and natural gas.

Base Year : 1970

12. The series of index numbers with base 1970, which takes into account the structural changes that have taken place in the industrial activity of the country since 1960, was released in March 1975 covering 352 items comprising 61 items for mining 290 for manufacturing and 1 for electricity respectively of the earlier series. The weighting diagram for the manufacturing sector was based on the results of ASI 1970, whereas for the mining sector, the net value added by that sector as estimated by Indian Bureau of Mines was used. In case of electricity, the net value added in 1970 as available from the White Paper on National Income published by CSO. The weights were assigned to different industry groups according to the summary tabulations of Annual Surveys of Industries (ASI)-1970, while the item level weights within an industry group were based on the detailed tabulation of ASI-1968, since the detailed results for the base year 1970 were not available at that time. The allocation of weights to sectors, major-groups, groups and sub-groups were done on the basis of ‘net value added’. The selection of items for the manufacturing group was made on a objective criteria viz. (a) availability of regular monthly report of production, and (b) importance of the item, judged by the value of gross annual production/value added. Following the above selection criteria, a number of items were dropped from the earlier series and several new items were included in the revised series so as to reflect the latest industrial pattern.

13. The year 1970 was chosen as the comparison base on account of its nearness to the reference period chosen for a number of other official indices, like the wholesale price index, consumer price index etc. apart from satisfying the other criteria of selecting a base year.

14. In the Manufacturing Sector, weights upto 3-digit level of Industrial Classification was allotted on the basis of value added by manufacture covering the entire factory sector of ASI 1970. Since estimates of net value added were not available beyond 3-digit level of classification for the Sample Sector of ASI, the weights to the industries beyond the 3-digit level were based on value added by the manufacture of Census Sector alone of ASI 1970. The weights at the item level were allocated on the basis of the results of 1968 only as item-wise data on value of production for ASI 1970 were not available at that time. In the case of Cotton Textiles, the value

added by manufacture for yarn and cloth was computed separately for weighting purposes. The value added per unit of yarn produced in spinning mills was first computed and applied to the total production at spindle points. The value added thus arrived at for yarn was then subtracted from the total value added for Cotton Textile Industry to obtain the value added for cloth. In case of few other items, however, the gross value of production was not available from ASI and the relevant data of these items was collected from concerned sources.

15. For compiling the index monthly production reports were received by CSO from as many as 17 source authorities, who in turn collects data from the production units. In terms of the number of items covered, the largest source was the then Directorate General of Technical Development, who supplied monthly production data on as many as 261 out of 290 items included in the manufacturing sector. The data relating to mining and quarrying and electricity sectors were furnished to CSO by Indian Bureau of Mines and Central Electricity Authority respectively.

Base Year : 1980-81

16. The Government of India felt that the continued adoption of 1970 as the base year was leading to inadequate reflection in the IIP of the changes that have taken place in the industrial structure and set up a Working Group in 1978 under the Chairmanship of the then Director General of CSO, to consider the change of the base year and recommend modifications in the weighting diagram. The working group first explored the possibility of adopting 1975-76 as the base year for the revised IIP and finally decided to shift the base to 1980-81, to accommodate adequately items from the small-scale sector.

17. For selection of items for the 1980-81 series, the following criteria were adopted :-

i. regular monthly report of production should be available in respect of the selected items. ii. each items should generally account for either a gross annual production of Rs.5 crore or

of gross value added of Rs.1.25 crore. This requirement was, however, been waived in the case of industry groups which are not represented by sufficient number of items or in case of important items in respect of which the developing agencies are kept to watch the growth movement.

iii. if the industry group is represented by many qualifying items, only those items with a relatively larger share of production in terms of value, should be included in the index, which together account for most of the group weight.

18. The Working Group gave its report in January 1986. The salient features of the changes are as under :

i. new items were included, while 95 items of the 1970 index were dropped. The Working Group also clubbed together or sub-divided a few items of the 1970 index. However, the total number of items covered by the manufacturing sector in the 1980-81 series, continued at 290 after these changes.

ii. items, generally those contributing atleast 25% to the total production of the item in the base year, have been recommended for inclusion of production by the small-scale sector

as well. Development Commissioner, Small-Scale Industries (DC SSI) could line up regular monthly production data for, only 18 items from July 1984.

iii. The 1970 series of IIP is based on National Industrial Classification (NIC) 1970 published by CSO.

19. The weighting diagram upto the ultimate digit of NIC was compiled on the basis of gross value added of the factory sector of ASI 1980-81. The weights for the selected items within each industry were apportioned on the basis of value of output figures as available from ASI 1980-81. While this method was followed for all the industries, in respect of Cotton Textiles (decentralised sector) a different approach had to be adopted. The ASI returns relating to factory sector units classified as ‘ cotton spinning other then in mills’ , ‘production of khadi’, ‘weaving and finishing of cotton textiles in handlooms’, etc. were divided into two groups, viz. those which reported only yarn as their main product and those which reported both yarn and cloth (or only cloth) as their main product. The gross value added per kg. of yarn was obtained from the set of returns and this was used to arrive at the gross value added per metre of cloth (in the decentralised sector) from the second set of return. The gross value added per metre of cloth, thus arrived, was then used to obtain the total gross value added in the decentralised sector for 1980-81, on the basis of the total production data in the decentralised sector as collected from the Textile Commissioner’s Office. The gross value added estimated was then assigned to the NIC group, jacking up the corresponding figures for the industry group 23 by the same amount. There were a few items for which the value of production in ASI 1980-81 was less than the corresponding value supplied by the DGTD, and was used for assigning the weights at item levels. For some items where data were available from both DGTD and DCSSI, item level weights were distributed using the total values from both the agencies.

20. The Index of Industrial Production is a quantitative index, the production of the items is reported by the source agencies in physical terms. However, the unit of reporting in respect of certain items like machinery, machine tools etc. is in value terms. In such cases, the monthly figures of production value, is first deflated by the Wholesale Price Index (base 1981-82) for the concerned category, issued by the O/o the Economic Adviser, Ministry of Industry.

21. The index is a simple arithmetic mean of production relatives computed using Laspayere’s formula. The index is compiled in stages, initially for items, then for sub-groups, groups and major groups, sectors and finally for all sectors combined. The index of monthly production covering 61 items supplied by Indian Bureau of Mines is dovetailed with indices of manufacturing and electricity sectors for compiling the general index of industrial production.

22. Till 1970 series the coverage of manufacturing sector was restricted to only large and medium units due to non-availability of production information for small-scale units on regular basis. For the first time in 1980-81 series, the small-scale sector was represented by 18 items in the compilation of index. For these items no separate weight was assigned in the weighting diagram. However, the production of these items is clubbed with the production figures of the corresponding items supplied by the large and medium units. In cases where the production figures from the two sources are in different units, restricting the clubbing of production, the weight allocated to the item(s) is sub-divided on the basis of share of the two sectors in the base year which is used for compilation of the index.

23. The IIP series with base 1980-81 has been computed for each month from 1981-82 to March, 1998. The representation of the small-scale sector was included in the index from the month of July, 1984, prior to which only DGTD production data was utilised.

Revised Series of IIP with Base Year 1993-94 :

Technical Advisory Committee

24. The changes in the structure of the industrial sector over time makes it necessary to revise the IIP periodically so as to measure the real growth in the industrial sector. Accordingly, CSO attempted an exercise of revision of base year from 1980-81 to 1985-86 and compiled indices for the period April 1986 to May 1995 with base 1985-86. However, in an inter-ministerial meeting held in CSO in November 1995, it was decided to abort this base year revision mainly due to its delayed implementation. It was thought that as detailed results of ASI, 1993-94 would be available shortly, it will be better to shift the base year to 1993-94. Incidentally, the year 1993-94 was also accepted by the Office of Economic Adviser, Ministry of Industry for shifting the base year of WPI from 1981-82. The Technical Advisory Committee (TAC) which had been set up in the Department of Statistics in June, 1995 to advise on Compilation of Comparable State IIPs and Composite all-India IIP was also entrusted subsequently in November 1996 with the responsibility of examining all the issues and providing technical guidance in the matter of shifting the base year of all-India IIP to 1993-94. The salient features of the recommendations of the TAC in this regard are as under:-

a. The current series of all-India IIP may be revised by shifting its base to 1993-94; b. Recognising the contribution of the unorganised sector, the weighting diagram of the

revised series should take into account the total production of both the organised and unorganised manufacturing sectors.

c. In view of the difficulties in lining up item-wise monthly production data for small scale items, the selection of items may be based only on the detailed results of ASI 1993-94, as has also been the practice in the past. At least 18 items of small scale sector included in the present series may be considered for inclusion in the new series;

d. The item basket for the revised series of all-India IIP with base 1993-94 may be selected in a similar manner as recommended for selection of State level item basket i.e., the selected items should account for nearly 80% of the total output for the manufacturing sector. However the criteria may be used with certain flexibility. For example, items not accounting for a gross annual production of Rs. 80 crore may not necessarily be included in the basket. The criteria may be relaxed, if necessary, to ensure that the provisionally selected items in all the 2-digit industry groups captured at least 60 percent of the Value of Output of the particular group. The over-riding criteria for finalisation of item basket would be the regular flow of monthly production data from the source agencies.

e. The revised series would follow the National Industrial Classification (NIC) 1987. f. Gross Value of Output (GVO) rather than Gross Value Added (GVA) may be used for

weighting purposes from sectoral (1-digit) to the ultimate (4-digit) levels of industry for compilation of both the State IIPs as well as all-India IIP.

25. Most of the recommendations of the TAC were accepted. However, the use of GVO as weights at industry group levels was not accepted for Compiling the All India IIP and GVA was continued to be used as in the 1980-81 series.

Scope and coverage:

26. The scope of the index has been confined to mining, manufacturing and electricity sectors and does not cover gas, water supply and construction. The distribution of items covered by the index with 1980-81 and 1993-94 base year are as follows :-

No. of Items

Sector              1980-81       1993-94

Mining                       61               64

Manufacturing          288             478

Electricity                    1                 1

Total                       350            543*

*(clubbed into 287 item groups :  Mining-1,   Mfg. - 285,  Electricity - 1)

Item basket:

27. Item basket:

In the revised IIP, the following criteria have been followed for selection of items for inclusion in the item basket :

i. Each item should generally account for at least Rs. 80 crore of Gross Value of Output at the item level and Rs. 20 crore of Gross Value Added at the ultimate digit level. The criteria has, however, been applied with flexibility in the case of industry group which were not represented by sufficient number of items;

ii. To improve the representativeness , some of the important items of IIP series with base 1980-81 have also been included, and

iii. Regular monthly flow of production data be available in respect of the selected items.

(iv) All the 18 items of small scale sector included in the current series of IIP with base 1980-81 have also been accounted for in the revised series with base 1993-94.

The item basket for the 1993-94 series contains 543 items as compared to 352 in the earlier series, the addition being 3 items for mining sector and 188 for the manufacturing sector. To retain the distinctive character and enable the collection of data, the source agencies proposed

clubbing of 478 items of the manufacturing sector into 285 item groups. 97 item groups were dropped and 99 added apart from 187 being common with the 1980-81 series.

 

28. The item basket so identified captured about 80% of the output of the manufacturing sector. The item basket has been finalised by having extensive discussions with source agencies especially DIP&P, Textile Commissioner, Directorate of Vanaspati, Development Commissioner (Iron & Steel), etc. keeping in view the distinctive character of the items

and the availability of regular flow of monthly production data. Also, to improve representativeness at 2-digit level, some important items of the current series with base 1980-81 have also been included in the basket.

Weighting Diagram:

29. The Sectoral Weights have been allocated on the basis of Gross Value Added for 1993-94 as published in the National Account Statistics For the first time, the weighting diagram of IIP with base 1993-94 has taken into account the contribution of the unorganised manufacturing sector alongwith that of Annual Survey of Industries (ASI). For estimating the 1993-94 Gross Value Added for the unregistered sector, the data available in the follow-up Surveys of Economic Census viz. Directory Manufacturing Establishments (DME), Non-Directory Manufacturing Establishments (NDME) and Own-Account Manufacturing Enterprises (OAME), for the years 1989-90 and 1994-95 have been used. After interpolating the GVA at 2-digit level, the further allocation at 3/4 digit levels of NIC has been done using the ratios of 1994-95 surveys, being in close proximity to 1993-94. The consolidated contribution at 2/3/4 digit level of NIC have been arrived at by super-imposing ASI data with unorganised data for the corresponding groups/sub groups. Further allocation of weights to the items within 4-digit industry groups have been done using Value of Output as available from ASI, 1993-94.

30. Following the recommendation of the TAC, the issue of using Gross Value Added and Gross Value of Output as a criteria for allocation of weights in compilation of revised series of IIP was deliberated in different forums including a Special Committee. It was recommended that GVA may be used for allocation of weights at industry group level in the revised series of IIP with base 1993-94, for the sake of continuity, consistency, the international practices and the UN recommendations on the subject.

Formula:

31. The index is a simple weighted arithmetic mean of production relatives calculated by using Laspeyre’s formula :

I= (Wi Ri)/ Wi

Where I is the Index, Ri is the production relative of the ith item for the month in question and Wi is the weight allotted to it.

Production data

Sources of data:

32. For the 1980-81 series, the Central Statistical Organisation used to receive monthly production data from as many as 18 source agencies, who collect data from the production units. For the revised series with base 1993-94 , the same set of 14 source agencies have been retained except for Railways, for which the consolidated data will now be supplied by the Railway Board instead of data being supplied earlier by 5 agencies. In terms of the number of items covered, the largest source is the Department of Industrial Policy & Promotion(DIP&P), which supplies data on as many as 213 out of 285 group of items in the manufacturing sector. The index relating to Mining and Quarrying sector is being supplied by the Indian Bureau of Mines, Nagpur which is dovetailed with manufacturing and electricity indices compiled by CSO to arrive at the General Index of Industrial Production. The data on Electricity sector is furnished by the Central Electricity Authority.

Use of Price Deflators:

33.          The Index of Industrial Production is a quantitative index, the production of items being expressed in physical terms. However, the unit of reporting in respect of certain items like Machinery, Machine Tools, Ship Building etc. is in value terms. The monthly figure of production value, in such cases is first deflated by the Wholesale Price Index (WPI) of the corresponding item/category, released by the Office of the Economic Advisor, Ministry of Industry.

 

One time revision of Indices

  34. The WPI figures with base 1981-82 were used for compilation of IIP upto the month of March 2000. In the revised series of WPI (base 1993-94), certain items have been dropped with the result that the item deflators for (i) Agarbatti, (ii) Industrial valves, (iii) Laboratory & Scientific Instruments and (iv) Fountain pen are not available in the revised series. Therefore, recently alternative item/sub-group deflators in the new series have been identified and used in place of above deflators of the old series. Recently, the IIP series had to be again recomputed from April 1994 onwards, taking into account the production of Natural Gas by Private Sectors and Joint Venture Companies and the internal utilization part of production of natural gas by the Public Sector Companies. Further, four items namely Radio Receivers, Photosensitized Paper, Chassis (Assembly) for HCVs (Bus, Truck) and Engines reported to DIPP by ‘Single Producers’ were also dropped from the item basket from April 1998 onwards, their weights re-distributed amongst the remaining items of the respective 2- digit categories of NIC 1987 and indices recomputed based on the revised weighting diagram.One time revision of the indices from April 1994 onwards based on revised WPI (Base 1993-94) deflators in place of the old WPI (Base 1981-82) deflators were been incorporated in the Press Note for quick estimates of IIP for May 2000 issued on 12th July 2000. The revised indices based on revised indices of mining sector and new

weighting diagram after deletion of four item groups have been incorporated in the Press Release on Quick Estimates of IIP for November 2000 released on 12th January 2001

 

Use-based Indices

  35. With switching over to the monthly quick estimates of IIP with base 1993-94, it was necessary to categorise the items included in the new series of IIP into various use-based categories i.e., Basic goods, Capital goods, Intermediate goods, Consumer durables and Consumer non-durables. A comparison of a number of items alongwith their weights in the use-based categories for 1980-81 and 1993-94 is as under

   

Comparison of number of items, weights in the use-based categories for 1980-81 and 1993-94 series of IIP

 

S.No. Use-based Category

No. of items Weight

      1980-81 1993-94 1980-81 1993-94 1. Basic goods 65 63 394.18 355.12 2. Capital goods 55 50 164.27 96.87 3. Intermediate

goods 96 90 205.07 264.39

4. Consumer durables

22 26 25.50 51.15

5. Consumer non-durables

50 58 210.98 232.47

Official Release of New Series of IIP (Base:1993-94)

36. The provisional indices based upon the new series of IIP were compiled and discussed in the meeting of important users viz, representatives from the Ministry of Industry, Planning Commission, Ministry of Finance, RBI etc. and the revised series was officially released on 27 th

May 1998. The tables enclosed with the press release were subsequently updated by incorporating data on 2-digit and use-based indices upto March 1998 and released on 8 th June 1998. One time revision of the indices from April 1994 onwards based on revised WPI (Base 1993-94) deflators in place of the old WPI (Base 1981-82) deflators have been incorporated in the Press Note for quick estimates of IIP for May 2000 and issued on 12th July 2000.

37. As per the norms laid down by Special Data Dissemination Standards (SDDS) of IMF, the quick estimate of IIP of any month is being released within six weeks from the reference month according to an advance released calendar. The press release on the quick estimate of IIP and the advance release calendar are being disseminated in the website of the Ministry since May 1998.

PROVISIONAL NATURE OF THE INDEX SERIES

38. In order to achieve the norms of SDDS for release of IIP within six weeks, all the 15 source agencies are required to furnish data to CSO within four to five weeks from the close of month. As all the production data to be used in computing the index will not have become available at the time the index for any month is being prepared, the provisional index for a given month is compiled and released. This index subsequently revised twice, namely, in the next month and the following third month.

Quality of Data :

39. In the absence of availability of regular monthly production data from the unorganised manufacturing sector, the item basket has been identified on the basis of data from the registered sector only. Further, the source agency responsible for the small scale sector could not line up the production data for the items of the revised series. As such, the revised IIP has taken into account only the data of 18 items of SSI sector included in the existing series. The new series of IIP would be revised on availability of data on additional items of the small scale sector. Till such time, the contribution of the unregistered sector, which is growing significantly as compared to the registered sector will not be reflected in the compilation of the revised IIP for want of data from this sector.

40. For the registered sector also, the quality of production data supplied by the major source agencies suffer from substantial non-response on the part of manufacturing units and consequential estimation resorted to by the sources agencies.

41. The industrial growth based on the revised IIP do not, therefore, seem to reflect the perceived ground realities. The quality aspect will have to be improved. A public debate on this issue would surely guide us in our efforts to improve the index.

Salient features of the Revised Series

42. The salient features of the Revised Series with base 1993-94 vis-a-vis the earlier series (Base: 1980-81) of IIP are :-

a. To have the wider coverage of items, the revised item basket with base 1993-94, encompasses 543 items grouped into 287 item groups against 352 items in the earlier series.

b. Recognising the importance of the unorganised sector which has grown significantly in the recent past, for the first time the weighting diagram of the revised series has taken into account the contribution of unorganised manufacturing sector alongwith the organised manufacturing sector.

 

c. To start with the revised IIP has taken into account all the 18 items of earlier series from the SSI sector. Unlike the earlier series, the SSI items have been allocated individual weights. The source agency is gearing up to supply production data for some additional items in the next 3-4 months, and the new series of IIP would be revised on availability of such data for the SSI sector.

d. The Revised Series has followed the National Industrial Classification NIC-1987 instead of NIC-1970.

 

e. As regards the timeliness, the current index of IIP is being released with a time lag of about six weeks from the reference month. As per SDDS norms of the IMF.

43. In order to improve the quality of production data, the Department of Statistics is having regular interactions with the source agencies to improve their system of data collection and estimation procedures.

Data on Indices

44. Following Tables incorporating items included in the item basket for the IIP series with base 1993-94, arranged under various 2-digit categories of the NIC-1987, Use-based categories and the time series data on 2-digit,sectoral and use-based indices for April'94 onwards are enclosed.

Table 1: 2- digit wise list of items included in the item basket of Index of Industrial Production (Base 1993-94=100).

Table 2: Use-based classifications of items included in the item basket of Index of Industrial Production (Base 1993-94=100).

Table 3: Monthly time series 2-digit level and sectoral indices growth rates,

                            and

                        Table 4: Monthly time series Use-based indices and growth.

45.  The following tables on the monthly time series 2-digit level and use-based           indices of industrial production with base 1980-81 are also enclosed.

Table 5: Monthly time series 2-digit level indices and growth rate (Base:1980-81)

                                                     and

      Table 6: Monthly time series use-based level indices and growth rate (Base: 1980-81),