The Indian government is set to implement changes to the Index of Industrial Production (IIP), aimed at wider sectoral coverage, a revamped item basket, chain-linked indices, and methodological improvements to better capture the data, according to a statement on Monday.
The proposed changes are part of the new IIP series with base year 2022-23, recommended by the Technical Advisory Committee on Base Year Revision of the All-India Index of Industrial Production (TAC-IIP), constituted by the Ministry of Statistics and Programme Implementation (MoSPI) in September 2024.
The panel has recommended adopting a chain-linked approach alongside the fixed-base IIP framework, in a major shift in methodology. It said annual updating of weights would reduce substitution bias and better capture structural changes in industrial production.
"By incorporating recent information into the weighting structure, the chain-based method improves the accuracy and relevance of the index and provides a more realistic measure of industrial growth," the panel said.
The panel has also proposed expanding the scope of the industrial output index to include minor minerals, rare earth minerals, gas supply, water supply, sewerage, and waste management activities.
The new series also introduces greater granularity through sub-indices, including separate indices for electricity generated from renewable and non-renewable sources.
The TAC-IIP recommended revising the IIP base year from 2011-12 to 2022-23 to align it with other macroeconomic indicators such as gross domestic product, consumer price index, and wholesale price index.
The revised series will have an updated item basket comprising 1,042 products mapped to 463 item groups, in aligment with with the National Industrial Classification.
The report pointed out that regular revisions of the base years of economic indicators like IIP are "essential to ensure that they remain representative of current industrial activity and continue to accurately reflect evolving economic realities".
The first release of the revised IIP series is scheduled for June 1 and will provide index values from April 2023 onwards, including the quick estimates for April.