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Revision Of Base Year Of All-India IIP From 2004-05 To 2011-12

May 12, 2017: 1. The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, revises the base year of the macroeconomic indicators, as a regular exercise, to capture structural changes in the economy and improve the quality and representativeness of the indices. In this direction, the base year of the all-India Index of Industrial Production (IIP) has also been revised from 2004-05 to 2011-12 to not only reflect the changes in the industrial sector but to also align it with the base year of other macroeconomic indicators like the Gross Domestic Product (GDP), Wholesale Price Index (WPI).

2.      Revisions in the IIP are necessitated to maintain representativeness of the items and producing entities and also address issues relating to continuous flow of production data. In the past, such changes were effected at the time of a revision in the base year. With the release of the new series of IIP (base 2011-12), an institutional mechanism has been established for facilitating dynamic revision of the item list of products and the panel of factories, through a Technical Review Committee, chaired by Secretary, Ministry of Statistics & PI. This Committee will meet at least once a year for identifying new items that need to be included in the item basket and removing those that have lost its relevance in the industrial sector or are no longer being produced.

3.      IIP in the revised series will continue to represent the Mining, Manufacturing and Electricity sectors. The revised series uses the National Industrial Classification (NIC) 2008 for the purpose of classification of industrial production.  The unit coverage of IIP will, as before, cover entities in the organized sector units registered under the Factories Act, 1948.

4.      A detailed note on the changes introduced in the new series of IIP is at Annexure I. Highlights of the changes introduced are summarized below:

a.    The selection of items in the new series has been done at the 3 digit level of NIC for better representation as compared to selection at 2 digit level done in 2004-05 series.

b.      At the broad level, the new series has a total of 809 items occurring in the manufacturing sector in the item basket (405 item groups), where 149 new items like Steroids and hormonal preparations, Cement clinkers, Medical/ surgical accessories, Pre-fabricated concrete blocks, refined Palm Oil have been added and 124 items such as Biaxially Oriented Polypropylene (BOPP) Films, Calculators, Colour TV picture tubes, Gutka have been deleted from the 2004-05 series which had 620 items (397 item groups) in the manufacturing sector. The sectoral composition of the IIP is as follows:
Sectoral Composition of the IIP

c.     To reflect the increasing significance of electricity generation from renewable sources, it has been decided to include data on electricity generation figures from these sources in the new series. This inclusion is being done from April, 2014 onwards as monthly data for electricity generation from renewable sources for earlier months were not available.

d.       For capital goods, data in the new series will now be captured in terms of ‘work in progress‘ to better represent the growth of capital goods and to avoid reporting of production figures in bulk after the completion of production. Details on this methodology are available in the Report of the Working Group set up for the revision of base year, which may be accessed in the official website of this Ministry.

e.      The number of source agencies reporting data for compilation of IIP in the new series will be 14 as compared to 15 in the current series. This is on account of the fact that data on ‘Iodised Salt’ in the new series will be provided by the Department of Industrial Policy and Promotion (DIPP) as O/o Salt Commissioner is not in a position to supply Salt production data after abolition of Salt Cess Act, 1953 in Finance Bill 2016.

f.      In the Mining Sector the coverage has undergone a change on account of the MCDR Amendment Rules, 2016 resulting in 27 non-metallic minerals being designated as minor minerals and which are no longer monitored by Indian Bureau of Mines.

5.      Based on the recommendations of the Working Group, the Use-Based Classification (UBC) has been re-framed by replacing “Basic Goods” with “Primary Goods” and introducing a new “Infrastructure/ Construction goods” category. The former change is to improve clarity on the movement of IIP of Primary Goods in industry and the latter aims to address the linkage of production with Infrastructure and Construction sector. A brief table giving the use based classification is given below:

Use-Based Classification
Use-Based Classification - all india iip
NA – Not applicable

6.      As in the 2004-05 series, the practice of using Wholesale Price Index (WPI) to deflate items for which data is reported in value terms will continue. However the number of items in the new series for which data will be captured in value terms will be 109 instead of 54 in the existing series. Wholesale Price Index (WPI) with base 2011-12 has been used for deflation.

7.      Based on the monthly production figures provided by the source agencies from April 2011 till March 2017, the monthly indices and growth rates have been worked out. The monthly indices for the new series with base 2011-12 from April 2012 through March 2017 at the sectoral level are provided at Statement I. The monthly growth rates at the sectoral level for the IIP series with base 2011-12 vis-à-vis 2004-05 are provided at Statement II. The annual growth rates at the sectoral level for the IIP series with base 2011-12 vis-à-vis 2004-05 are provided at Statement III. The annual growth rates as per the re-framed Use-Based Categories are provided at Statement IV.

8.      Detailed tables including indices at sectoral level, NIC 2 digit level and as per Use-Based Classification for the old and new series will be made available on the website of MoSPI at 5.30 PM on 12.05.2017.

9. User of the new IIP series (base 2011-12), while comparing with the old series may like to consider the following aspects:
a. The growth rates of the two series are not strictly comparable as the indices for 2011-12 have been normalized to 100 at a monthly level.
b. There has been an increase in number of factories in panel for reporting data and closed ones have been removed.
c. The item basket has been revised with inclusion of new items and exclusion of old ones.
d. The electricity sector now includes data from renewable energy sources.
e. The coverage of the mining sector has undergone a change.

The STATEMENTS (I, II & III), ANNEXURE I and APPENDIX (I, II & III) are available in the original press release dated by 12th May 2017 by Ministry of Statistics & Programme Implementation.

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