Former chief statistician Pronab Sen points to a big mismatch between IIP and export data, questions data collection.

India's industrial growth has been crawling below five per cent for months now and overall economic growth has moderated to a two-year low of 6.9 per cent in the second quarter of this financial year, say the statistics.

Then, how come export data do not show such a pathetic state, despite having manufactured goods in its basket.

Even after deceleration in growth, they were up over 10 per cent in October. Do the data capture the underlying movement in industry correctly?

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Pronab Sen, former Chief Statistician and ex-principal advisor in the Planning Commission, believes the industrial growth data do not capture the ground reality correctly. Others question the export data.

The new Index of Industrial Production was launched with much fanfare from this financial year, changing the composition of the index by deleting obsolete items like typewriters, tape recorders, sewing machines, television receivers and pencils, and adding modern articles like UPS, inverters, computer stationery, hair shampoo, colour television sets and instant food mixes.

Do even the new data not represent ground reality?

The contradiction has baffled many.

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Sen said there is no clear answer to why is there so much mismatch.

"On the face of it, the direction of trade statistics suggest there is nothing wrong in the export data," he said.

About 75 per cent of the IIP is manufacturing daya and in exports, almost 18 per cent.

If the latter grew at 45 per cent during April-September, that alone would mean the IIP growth should be somewhere around nine per cent, almost double the rate it is showing now for the first six months of this financial year.

Sen does not think that export data are faulty, as numbers from the importing countries suggest it is fairly accurate.

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So, has domestic consumption got stymied, being reflected in the IIP numbers?

He said there is no evidence to suggest that, as consumption numbers are positive.

They might not have been growing fast but are, nevertheless, in positive territory. Sen raised the needle of suspicion at the way IIP numbers are reported.

"My fear is that since IIP captures goods which leave the factory, units are sending the same data for the excise department which they are sending to the statistics department," he said.

Since exports don't come under excise, there is the discrepancy.

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In simple words, if a factory produces eight units in a month, five of which goes for domestic markets and the rest for export, the entity will send the data on five units only to both the excise department and the statistical department.
Three units go unreported.

The second reason for under-reporting, said Sen, could be a massive amount of re-export not getting captured in the IIP data.

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"There could instances where goods are being imported and then re-exported after making minor value additions, which is not getting reflected in the IIP," he said.

However, Deolitte, Haskins & Sells director Anis Chakravarty does not entirely agree.

He said unreporting of export data in the IIP may be marginally impacting the index, but there is no denying that industrial growth has been coming down and growth momentum has been slowing.

He also questioned the export data.

In sum, the data compilation is suspect.