The recent revision in the Index of Industrial Production (IIP) numbers, starting with the base year, has thrown up some interesting facts.
A big change in the new IIP data, taking 2004-05 as the base year against 1993-94 in the old series, is its classification of items and the weights assigned to these.
The change in weight is not proportional to the number of items included or removed from the basket of commodities.
Thus, the number of items in the manufacturing sector between the two bases has gone up from 473 to 620, while the total weight of this sector has come down from 79.36 per cent to 75.53 per cent in the total IIP.
In mining, the number of items has come down from 64 to 61, but the weights assigned to these have gone up to 10.47 per cent from 14.16 per cent.
Similarly, in electricity, though still a single-item one, its weight has gone up from 10.17 per cent to 10.31 per cent.
Chief Statistician T C A Anant says the main reason for this is reclassification of items based on their share in value-added production.
For example, the weight of high-speed diesel, liquefied petroleum gas, cement, commercial vehicles and passenger cars has gone up to 2.14 per cent, 1.12 per cent, 2.41 per cent, 1.94 per cent and 1.97 per cent in the 2004-05 series from 0.66 per cent, 0.09 per cent, 1.99 per cent, 0.11 per cent and 0.43 per cent in the 1993-94 base series.
"This clearly means the share of these in value-added production has gone up during the decade," Anant
The reason for the lower number of items in manufacturing and overall less weight in the new series is because of the clubbing of some items and revisiting their weights, based on the Annual Survey of Industries and National Sample Survey numbers.
For example, in the food and food products sub-group in manufacturing, the weight has gone down from 9.08 per cent with the 1993-94 base to 7.28 per cent with the 2004-05 base.
But in the 1993-94 base, the sub-head comprised only food products; now, beverages have been added.
Conversely, the weight of wool, silk and manmade items with the 1993-94 base was 2.26 per cent, which has gone up to 2.78 per cent. This is because in the new series, the items have been clubbed in a broad category called wearing apparel, dressing and dyeing fur.
Similarly, rubber items, also part of the manufacturing sector, earlier also had plastic, petroleum and coal products clubbed.
However, in the new IIP, rubber and plastic products are classified as a separate sub-group, while petroleum and coal products are grouped separately.
"The same thing which has happened in manufacturing has also happened in mining and electricity," Anant said. In the old IIP series, manufacturing was divided into 17 sub-groups. In the new one, it has risen to 22.
"The previous index coverage of the manufacturing sector was poor both in terms of coverage of products and their share, which the new series seeks to rectify. Hence, though the cumulative weight might have gone down between the two series, their impact on the overall IIP will be far sharper," Anant said.
