Reliable data base forms the strongest platform for sound analysis and research. For the sake of reliability, the dynamics of the market and the market realities are always to be taken care of. The recently released industrial production indices on 2011-12 basis is a major improvement on 2004-05 based IIP and is one such development that was much awaited. During the past years spanning more than a decade, many items in the indices are either no longer produced having been outdated and obsolete or replaced by new items whose outputs need to be captured. Alternatively fresh items emerged on the scene that the industrial data need to incorporate. From 2004-05 series data, the item groups numbering 124 have been dropped (weightage 14.4%) and 149 item groups (weightage 15.4%) have been added.
There are 258 item groups that are common to both the series. The total item groups are now 407 (against 399 earlier) and are composed of 809 items (against 620 items earlier). By changing the base from 2004-05 to 2011-12 the IIP data is now aligned with NAS data on GVA/GDP and the WPI series. The sectoral weights have been computed using GVA figures from NAS 2011-12 and significantly the sectoral weights are distributed at 2, 3 and 4 digit level of NIC 2008 using GVA from Annual Survey of Industries 2011-12.
The use-based classification of industries which forms a critical tool of analysing the health of the various industrial groups has been reworked on the basis of all the changes indicated above. In the new series, the primary goods (15 item groups) that comprises of mining (comprising only 29 minerals as identified by Indian Bureau of Mines), electricity, fuels, fertilisers with weights of 34.05 is replacing the basic goods. The capital goods (67 item groups and wt: 8.22) consist of all machinery items and include “work in progress”.
The intermediate goods (110 item groups with wt: 17.22) are composed of items like yarns, chemicals, semi-finished steel etc. MS Slab (wt: 0.8438), MS Blooms, Billets, Ingots, Pencil Ingots (wt: 0.9497), Alloy/SS Blooms, Billets, Ingots, Pencil Ingots (wt: 0.4805), Sponge Iron/DRI (WT: 0.4036), Pig Iron (wt: 0.3978), Pipes (wt: 0.3384), Ferro chrome (wt: 0.0770), other Ferro Alloys (wt: 0.1489) belong to this item group. A new group under infrastructure/ construction ( 29 item groups with wt: 12.34) has been created to do justice to the growing importance of infrastructure sector in the economy to include paints, cement, cables, bricks, tiles, Rail materials which are not part of consumer durables/ intermediate goods.
It is to be noted that bars and rods and alloy/SS with a weight of 1.9185, cold rolled sheets/coils (wt: 0.6808), HR coils (wt: 1.3487), GP/GC (including tin plate, tin free steel, TMBP, with wt: 0.7895), plates (wt: 0.8350), structural steel (angles, shapes, sections with wt: 0.7895), flat products of alloy steel (wt: 0.2831), flat products of SS (WT: 0.1134), rail/rail materials (wt: 0.1175) belong to the new infrastructure/construction sector. The consumer durable (86 item groups with wt: 12.84) sector comprises of garments, passenger vehicles etc and the consumer non-durable sector (100 item groups with wt: 15.33) consists of food items, medicines, toiletries etc.
Although the growth rates in two series are not strictly comparable as 2011-12 is normalised to 100 on a monthly level, it is pertinent to mention that, in general, the GVA figures of the organised sector that is reported in MCA data indicate a higher growth trajectory than that shown by the health of the unorganised segment of the specific industrial group. Thus, by taking the new series only, it is observed that in FY17, the mining sector (weight: 14.373) has grown by 5.3% (against 4.3% in FY16), manufacturing (Wt: 77.633) by 4.9% (against 3.0% in FY16), electricity (wt: 7.994) by 5.8% (against 5.7% in FY16) and total IIP has grown by a respectable 5.0% in FY17 against 3.4% growth in the previous year.
One may also note that the old series (base: 2004-05) shows manufacturing sector growing at (-) 0.1% and total industry by 0.7% in FY17. Thus the change in the basket of items and item groups by dropping the outdated and obsolete items, inclusion of new emerging segments and changing the weightage norms have yielded better performance indicators for the various components of the industry in FY17 and also in the previous 4 years. The dichotomy between physical output of IIP data and GVAs of NAS data is thereby minimised. The comfort for steel industry is that it is now officially recognised as a part of infrastructure/construction sector and contributes around 9.4% to industrial production as per the new series compared to 6.72% in the earlier series.
(Views expressed are personal)