{"id":56713,"date":"2025-10-13T22:42:39","date_gmt":"2025-10-13T17:12:39","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=56713"},"modified":"2025-10-15T11:28:53","modified_gmt":"2025-10-15T05:58:53","slug":"iip-base-year-revision","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/13-10-2025\/iip-base-year-revision","title":{"rendered":"Base Year Revision of Index of Industrial Production (IIP)"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The Ministry of Statistics and Programme Implementation (MoSPI) is set to revise the base year of the Index of Industrial Production (IIP) to 2022\u201323, aligning it with the new base year proposed for GDP estimation.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Need for Revising the Base Year<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The IIP is a key <strong>short-term indicator<\/strong> of industrial activity, used by the government, RBI, and researchers for policymaking, forecasting, and national accounts.<\/li>\n\n\n\n<li>The last IIP base year revision was 2011\u201312 and since then, major <strong>technological changes, product diversification, and digitalization<\/strong> have reshaped industrial production.\n<ul class=\"wp-block-list\">\n<li>India\u2019s economic structure has transformed: services contr2ibute <strong>62.5% of GVA, <\/strong>agriculture <strong>15%<\/strong>, and industry <strong>22%<\/strong>, indicating scope for growth.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>MoSPI\u2019s Technical Advisory Committee for Base Year Revision of IIP (TAC\u2013IIP)<\/strong> has recommended aligning the IIP base year with <strong>2022\u201323<\/strong>, to capture these structural and technological shifts.<\/li>\n\n\n\n<li><strong>The United Nations<\/strong> has recommended that the base period of the index number should be revised<strong> quinquennially (every five years).<\/strong><\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-background\" style=\"background-color:#ebecf0\"><tbody><tr><td><strong>Index of Industrial Production (IIP)<\/strong><br>&#8211; The IIP is an index which shows the <strong>growth rates in different industry groups of the economy<\/strong> in a stipulated period of time.<br>&#8211; The <a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/13-10-2025\/iip-base-year-revision\" data-type=\"link\" data-id=\"https:\/\/www.nextias.com\/ca\/current-affairs\/13-10-2025\/iip-base-year-revision\">IIP<\/a> is compiled as a simple weighted arithmetic mean of production relatives by using <strong>Laspeyre\u2019s formula.<\/strong><br>&#8211; It is a composite indicator that <strong>measures the growth rate of industry groups<\/strong> classified under:<br>1. <strong>Broad sectors: <\/strong>Mining, Manufacturing, and Electricity.<br>2. <strong>Use-based sectors<\/strong>: Basic Goods, Capital Goods, and Intermediate Goods.<br>&#8211; <strong>Released by: <\/strong>The Central Statistical Organisation (CSO) , Ministry of Statistics and Programme Implementation.<br>&#8211; <strong>Base year<\/strong>: 2011-2012<br>&#8211; <strong>Periodicity:<\/strong> Monthly basis<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Proposed Improvements in the New IIP Series<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Expanded Scope and Coverage:<\/strong> The item basket is being revised to eliminate outdated products (e.g., fluorescent tubes, kerosene) and include modern goods like LED bulbs, laptops, vaccines, and aircraft components.\n<ul class=\"wp-block-list\">\n<li>For the first time, minor minerals and gas supply will be covered, aligning with International Recommendations for the Index of Industrial Production (IRIIP, 2010).<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Refinement of Data and Classifications:<\/strong> MoSPI reviewed 276 <strong>\u201cnot elsewhere classified\u201d (n.e.c.) items<\/strong>, meaning they didn\u2019t fit neatly into any specific category.\n<ul class=\"wp-block-list\">\n<li>MoSPI reassigned <strong>95%<\/strong> of these items to specific product categories, leaving only <strong>5%<\/strong> unassigned.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Substitution of Non-operational Factories:<\/strong> Earlier, factories remained in the sample even after closure or production change, leading to data distortion.\n<ul class=\"wp-block-list\">\n<li>The new system introduces a methodology for timely replacement of such factories, ensuring continuity and comparability through overlapping data.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Seasonal Adjustment of Data: <\/strong>A seasonally adjusted IIP series will be introduced for better identification of underlying trends and cyclical movements, improving short-term economic forecasting and policy analysis.<\/li>\n\n\n\n<li><strong>Integration with Digital Databases: <\/strong>The integration of GST data and increased digital adoption in industrial statistics will enhance accuracy, reduce reporting lag, and improve real-time monitoring.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What are the Challenges?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Data Gaps and Coverage Issues:<\/strong> Some sub-sectors, especially MSMEs and informal units, may remain underrepresented due to data constraints.<\/li>\n\n\n\n<li><strong>Timeliness of Data Collection:<\/strong> Ensuring real-time data flow from diverse industrial establishments remains a challenge.<\/li>\n\n\n\n<li><strong>Transition Management: <\/strong>Ensuring comparability with the old series and managing statistical breaks during transition will require careful calibration.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Strengthen Industrial Surveys: <\/strong>Broaden coverage of the Annual Survey of Industries (ASI) and use of technology-based reporting mechanisms.<\/li>\n\n\n\n<li><strong>Integration with Digital Ecosystems:<\/strong> Utilize e-way bills, GSTN, and MCA21 data to enhance industrial statistics\u2019 timeliness and reliability.<\/li>\n\n\n\n<li><strong>Periodic Updates: <\/strong>Ensure base year revisions every 5\u20137 years to keep pace with India\u2019s rapidly evolving industrial structure.<\/li>\n\n\n\n<li><strong>Capacity Building:<\/strong> Train state and local statistical staff for data collection and validation to improve data quality at source.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/indianexpress.com\/article\/explained\/explained-economics\/revisiting-indias-industrial-barometer-base-year-revision-of-iip-10300068\/\" target=\"_blank\" rel=\"noopener\"><strong>IE<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong>Context<\/strong><\/p>\n<li class=\"ms-5\">The Ministry of Statistics and Programme Implementation (MoSPI) is set to revise the base year of the Index of Industrial Production (IIP) to 2022\u201323, aligning it with the new base year proposed for GDP estimation.<\/li>\n<p><\/p>\n<p><strong>Need for Revising the Base Year<\/strong><\/p>\n<li class=\"ms-5\">The IIP is a key short-term indicator of industrial activity, used by the government, RBI, and researchers for policymaking, forecasting, and national accounts.<\/li>\n<li class=\"ms-5\">The last IIP base year revision was 2011\u201312 and since then, major technological changes, product diversification, and digitalization have reshaped industrial production.<\/li>\n<li class=\"ms-5\">India\u2019s economic structure has transformed: services contribute 62.5% of GVA, agriculture 15%, and industry 22%, indicating scope for growth.<\/li>\n<li class=\"ms-5\">MoSPI\u2019s Technical Advisory Committee for Base Year Revision of IIP (TAC\u2013IIP) has recommended aligning the IIP base year with 2022\u201323, to capture these structural and technological shifts.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/13-10-2025\/iip-base-year-revision\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":56685,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-56713","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/10\/iip-base-year-revision.png","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/56713","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=56713"}],"version-history":[{"count":4,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/56713\/revisions"}],"predecessor-version":[{"id":56853,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/56713\/revisions\/56853"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/56685"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=56713"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=56713"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=56713"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}