NEW DELHI: The new index of industrial production (IIP) series, having 2022-23 as base year, is set to track for first time the output of rare earths and minor minerals, piped natural gas (PNG), water supply, sewerage and waste management — the Technical Advisory Committee (TAC) constituted to undertake base year revision under IIM Kozhikode professor Mridul K Saggar noted in its recommendations. The new index will make its debut on June 1.IIP will be the third major high-frequency economic indicator to undergo a base-year revision this year, following similar updates to Gross Domestic Product (base year 2022-23) and Consumer Price Index-based retail inflation (base year 2024).The IIP basket is set to expand to 1,042 items categorised under 463 groups in the new series from 839 items under 407 groups in the current series. “Regular revisions of the base years of economic indicators like IIP are therefore essential to ensure that they remain representative of current industrial activity and continue to accurately reflect evolving economic realities,” the committee noted.It also recommended dropping items from the basket, such as kerosene, iodised salt, incandescent lamps, fluorescent tubes and compact fluorescent lamps, electric filament lamps, and sewing machines, among others.The committee has also recommended that the output Producer Price Index (PPI) be adopted as the preferred deflator for the new series once it becomes available, replacing the Wholesale Price Index (WPI), which it said may continue only as an interim measure.It also proposed chain-basing of the new IIP series, which will allow periodic updating of weights, typically on an annual basis, so that production patterns of the industry are captured better. Meanwhile, the seasonal adjustment of IIP may be undertaken “only after availability of the desirable length of time series data (five years monthly data)”.
