The Ministry of Statistics and Programme Implementation (Mospi) is set to release a new index of industrial production (IIP) series on June 1, revising the base year from 2011-12 to 2022-23. According to reports from Business Standard, this revision reflects the significant changes in India's industrial landscape over the past decade. The new series includes 463 item groups compared to the previous 407, representing a substantial expansion in coverage scope. As per MoSPI, 2022-23 was selected as the new base year because it represents a relatively stable economic period and aligns with the base year used for other macroeconomic indicators such as GDP and Wholesale Price Index (WPI). The ministry emphasized that base year revision is necessary periodically to reflect structural changes in the economy, as over time some industries grow rapidly, new products emerge and older products become less relevant. Since 2011-12, India's industrial landscape has changed significantly with greater use of renewable energy, expansion in electronics manufacturing, growth in medical products and rising focus on infrastructure and digital industries. The Technical Advisory Committee for 'New Series of All India Index of Industrial Production 2022-23' highlighted that the structure of production, the relative importance of industries, and the range of products manufactured undergo continuous change over time, making regular revisions essential to ensure the index remains representative of current industrial activity.
In the manufacturing sector specifically, the number of item groups has increased from 405 to 455, with 64 item groups removed and 120 added. As reported by Business Standard, the new series incorporates rare-earth minerals, minor minerals, gas and water supply, sewerage & waste management, and drops items such as kerosene, sewing machines, and fluorescent tubes. According to MoSPI, 120 new item groups have been included in the revised series to reflect changes in industrial production and emerging sectors, with some examples including cards with magnetic stripes such as debit and credit cards, articles made from non-woven textiles, aircraft and spacecraft parts, and vaccines other than veterinary vaccines. The manufacturing basket has been prepared using data from the Annual Survey of Industries (ASI) for 2021-22 and 2022-23, focusing on products that make a significant contribution to industrial output. The selection process focuses on products contributing up to 90 per cent of output within an industry group, with additional products included where needed to ensure broad representation and emerging products contributing more than 2 per cent of output to capture changing industrial trends. The revised basket now comprises 1,042 products mapped to 463 item groups, including 120 new item groups, with the ministry noting that industrial statistics cannot remain fixed while industries themselves are rapidly changing.
In a significant methodological shift, the new series includes manufacturing items from the NEC (not elsewhere classified) category, unlike the FY12 series which excluded such items from the selection frame and redistributed their output across other items in the industry group. As per Business Standard, field officers have been revisiting factories to identify the specific products falling under these categories, making the index coverage more representative. The revised series introduces separate indices for renewable and non-renewable electricity generation, fuel minerals, metallic minerals, non-metallic minerals, gas supply, and water and waste services. The electricity and gas supply category has expanded from one item group to three item groups, while a completely new category -- water supply, sewerage and waste management -- has been added with two item groups. The mining and quarrying sector has expanded from one item group with 29 items to three item groups with 44 items, covering minor minerals and rare earth minerals alongside major minerals. The new mining basket includes 34 minerals comprising fuel minerals, metallic and non-metallic minerals regulated, along with 1 rare earth mineral and 9 minor minerals. The revised methodology also allows statistical authorities to replace permanently shut factories with comparable operating units and induct newly commissioned large factories into the sample base during the life of the series, which is expected to improve the representativeness and timeliness of industrial output data.
The broader basket of items will make the index more relevant for policymakers, businesses and investors, according to Mospi reports cited by Business Standard. The revision aligns with advanced economies' use of dynamic industrial measurement systems that regularly update weightings and production patterns. The revised series will now include minor minerals and rare earth minerals along with major minerals, providing a more comprehensive picture of industrial activity. Additionally, the index will continue to follow six use-based classifications including infrastructure and construction goods, primary goods, capital goods, intermediate goods, consumer durables, and consumer non-durables. The ministry said the new series will continue with the hybrid method for measuring industrial production, using quantity-based measures for uniformly measurable products and value-based indicators for quality-differentiated products. For products that take more than a month to manufacture, work-in-progress in value terms will be considered as a measure of output. The index will be released every month with a 28-day lag from the reference month. MoSPI will use a geometric mean-based approach to transition from the 2011-12 base series to the new 2022-23 series, with the ministry noting that significant advancements in statistical methodologies and computational capabilities over the period have made previously difficult processes easier to implement. The Technical Advisory Committee for base year revision of All India IIP (TAC-IIP) has recommended eventually replacing WPI-based deflators with the Output Producer Price Index (PPI) once it becomes operational, with WPI continuing as an interim measure.
The committee has recommended that state level IIP should be aligned with the all-India series in scope, methodology and classification to enable meaningful comparison across states and Union territories (UTs). As per Business Standard, IIP is one of India's earliest high-frequency indicators and is widely used for measuring short-term industrial performance, policy formulation, GDP estimation, and economic analysis. By widening the basket, revising the weights and bringing in newer sectors and products, the new series ensures that the metric continues to accurately reflect evolving economic realities. The revision comes months after the GDP and WPI series were overhauled earlier this year, aligning the IIP with other major macroeconomic indicators that share FY23 as the anchor year. The committee has recommended linking factor at the sectoral level using the geometric mean method, periodic factory substitution to address closures and line changes, and later consideration of chain-linked and seasonally adjusted versions once the time series becomes sufficiently long and stable.
