The government is set to form a committee to revise the Index of Industrial Production (IIP) series after an embarrassing discrepancy in the January data. Apart from revising the current series, the committee will suggest ways to improve the reporting of data.
The names doing the rounds for the likely head of the committee include Planning Commission member Saumitra Chaudhuri. When contacted, Chaudhuri did not comment on the matter. But, top government officials said, “It is a matter of time. After some formalities, the committee would be constituted. Chaudhuri has been asked and he has agreed.”
The officials said the committee was due to be set up, irrespective of the January error. It would not only revise the IIP base year and change the index composition but also aim at ensuring accurate data collection. Officials in the ministry of statistics and programme implementation (Mospi), which calculates industrial production, expressed helplessness at the insensitive nature of data-reporting agencies.
“According to the requirements, all agencies should report data to us by the last working day of the month previous to the one whose data is to be reported. However, many agencies report data as close as the 10th of the reporting month, while the data are to be released on the 12th,” they said.
Mospi had estimated the January industrial growth figure at 6.8 per cent but the revised figure stood at just 1.1 per cent. That means an overestimation of 5.7 percentage points, a goof-up described as “totally baffling” by finance minister Pranab Mukherjee.
| NEW-LOOK INDEX |
| * Govt to appoint committee for IIP revision |
| * Timing important as it comes just after data blunder |
| * Committee to look at revising base year from current 2004-05 |
| * New base year may not be 2009-10 since it was an exceptional year, with the economy recovering from the global financial crisis |
| * IIP composition may change; more important will be to address data reporting |
For January, Mospi officials were to release the IIP figures on March 12 (there is a lag of two months). However, the directorate of sugar provided its data, which caused major problems in the IIP calculation, late in the evening on March 7. Notably, sugar production was incorrectly reported by the directorate as 13.41 million tonnes in January, against the actual figure of 5.8 million tonnes.
The in-built system for data calculation in the central statistics office under Mospi flags any figure that shows a jump of over 30 per cent month-on-month. In the case of sugar, the jump was over 250 per cent, officials said.
The explanation offered by Mospi officials for the failure to detect the exceptional figures goes thus: "We received information late in the evening of March 7. The next day was Holi (the festival of colours). On the 9th, we initially thought the data could be high because of a bumper crop. But it was unusually high, so we did revert to the directorate of sugar. But, the next two days, being Saturday and Sunday, were holidays. The data had to be released on Monday morning."
In the data released on April 12, provisional IIP figures were released for February and the revised ones for January. Mospi officials said even for the February figures, the Kolkata-based joint plant committee of steel under the steel ministry sent its data as late as April 10.
"The IIP figures had to be released on April 12. Mospi has written to the steel secretary on this," said the officials. Such basic requirements had to be looked into by the new committee, they said.
They said, ideally, Mospi should be authorised to collect data but that would lead to duplication of work. "Also, such an arrangement may unnecessarily lead to increasing the reporting requirements for companies," they said.
The officials stressed the base year should be revised every five years and, hence, the new committee was being set up. The 40-member committee would have representatives from industry chambers, think tanks and the academic world, they said.
The Prime Minister's Economic Advisory Council chairman, C Rangarajan, said the new committee should not only look at reassigning various weights and changing the base year but also suggest improvements in reporting requirements.
