The base year for the Index of Industrial Production (IIP) is likely to be changed from 2004-05 to 2009-10. This is despite the fact that many don’t consider 2009-10 normal, owing to a drought in that year and a low base of economic growth in the previous year.
Last year, the base year for the IIP was revised from 1993-94 to 2004-05.
A working group, headed by Planning Commission member Saumitra Chaudhuri, is examining the issue. In its meetings, the committee had considered the possibility of 2011-12 as the base year, as 2009-10 had seen a drought. Also, the economic slowdown in 2008-09 had resulted in a low base for 2009-10.
However, many had argued if 2009-10 wasn’t a normal year, 2011-12 should also be considered abnormal, as growth had fallen to 6.5 per cent in that year. So, no year could be considered a ‘normal year’, members of the committee had argued, said sources privy to the development. “Therefore, it was decided to choose 2009-10 as the new base year for the IIP,” said a government official.“The revision will be in compliance with the United Nations’ system that calls for revision of indices once in five years,” the official added.
In 2009-10, gross domestic product grew 8.4 per cent, against 6.7 per cent in 2008-09. The industry grew a robust 8.9 per cent in 2009-10, against four per cent in the previous financial year. The manufacturing segment grew 9.7 per cent in 2009-10, against 4.3 per cent in 2008-09. In 2011-12, the sector grew just 2.5 per cent.
The Annual Survey of Industries (ASI) for 2009-10 may be used as the basic frame for selecting products for the manufacturing sector. ASI data for 2009-10 showed 10.28 per cent growth in the net value added, compared with 9.59 per cent growth in 2008-09. Currently, the IIP has 682 items and the products are selected in such a manner that the contribution of all these products to the national product is about 80 per cent.
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The Ministry of Statistics and Programme Implementation has also considered a revision of the National Accounts series, from the current 2004-05 to 2011-12.
The Wholesale Price Index, for which 2004-05 is the base year, is also being revised to present a better picture of the price situation in the economy. This matter, too, is being considered by a committee headed by Chaudhuri.
The Consumer Price Index (CPI) for rural and urban areas, which debuted in 2011, is also being revised. The base year for CPI (rural and urban), released by the Central Statistics Office, is likely to be revised from 2010 to 2011.