Revision of Base Year of IIP from 2004-05 to 2011-12

The Dollar Business Bureau

The Office of the Economic Advisor and the Ministry of Commerce and Industry in India released the first compilation of Index of Industrial Production (IIP) taking the base year as 1937. They had covered 15 industries then. Subsequently, the base years underwent a revision twice, 1946 and 1951

With the commencement of the Central Statistical Organization in 1951, the task of compiling and publishing the IIP was entrusted in this office. Since then the IIP has been released monthly by the CSO.

The initial general scope of the IIP included details of the Manufacturing, Mining, Electricity, Construction and Gas sectors. But due to challenges in obtaining data, the present IIP has details of the Manufacturing, Mining and Electricity sectors only.

The revision of the base year of IIP is revised periodically to measure realistically the growth in the industrial sector. The United Nations Statistical Organization recommends revising the base year quinquennially. The index in India was revised successively since its starting in 1946, ’51, ’56, ’60, ’70, ’80-81 and ’93-94 and so on. The present index has also been revised from 2004-05 to 2011-12, to align it with the base year of other macroeconomic indicators like GDP and WPI.

 As per the recent press release by the Ministry of Statistics and Programme Implementation, the following changes have been summarised below:

1. Revisions in the IIP are necessitated to maintain representativeness of the items and producing entities and also address issues relating to the 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.
2. 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 organised sector units registered under the Factories Act, 1948.
3. 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.
4. 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.