NEW DELHI: The new Index of Industrial Production (IIP) series, which shifts the base year from 2011–12 to 2022–23 and is scheduled for release on June 1, will, for the first time, track rare earths and minor minerals, piped natural gas (PNG), and water supply, sewerage and waste management.
The recommendations are contained in the report of the Technical Advisory Committee (TAC), released by the National Statistics Office on Monday.
The number of item groups under the new series rises to 463 from 407 in the 2011–12 series. In manufacturing, the count goes up from 405 to 455 item groups, with 64 item groups dropped and 120 new ones added. Items dropped include kerosene, iodised salt, incandescent lamps, fluorescent tubes and compact fluorescent lamps, electric filament lamps, sewing machines, wines, and butter, among others.
“Overall, the revised item basket demonstrates improved alignment with the current industrial structure, greater sectoral granularity, and enhanced responsiveness to evolving production patterns, thereby strengthening the statistical robustness and policy relevance of the IIP,” the report added.
TAC has recommended widening the index’s coverage across all constituent sectors to ensure that it “remains representative of current industrial activity and continues to accurately reflect evolving economic realities”. In mining, it proposed adding one rare earth mineral and nine minor minerals to the existing basket of fuels and minerals, arguing that “they are becoming increasingly important for infrastructure, renewable energy, electronics, and advanced technologies”.
India holds the world’s third-largest reserves of rare earth elements, and the panel observed that commercial production of rare earth permanent magnets is expected to begin by the end of 2026.
An entirely new sector — water supply, sewerage and waste management — has been added. With volume data unavailable, the committee suggested using the number of rural and urban tap connections to track water supply; sewerage and septage connections across 500 AMRUT (Atal Mission for Rejuvenation and Urban Transformation) cities for sanitation; and the volume of waste collected and processed in urban areas for waste management.
In the electricity and gas segment, the panel recommended bringing the distribution of PNG into the index and, significantly, disseminating electricity generation from renewable and non-renewable sources separately. “This will be a matter of great interest for public policy, investors in green finance, and researchers working in the area of energy and environment,” the report said.
The committee further 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, which it said may continue only as an interim measure. The Office of the Economic Adviser is currently developing a PPI with a 2022–23 base year. Moving to PPI, the panel said, would bring India’s index in line with international best practice.
The report also recommended compiling and disseminating the index using the latest industrial classification, National Industrial Classification 2025, which aligns with international standards and reflects digitalisation and green energy activity.
Among other recommendations, the committee said “not elsewhere classified” items, which were earlier dropped from the basket, should be retained to better capture emerging products; state-level indices should be aligned with the national methodology; and the feasibility of a separate production index for the vast unincorporated manufacturing sector should be studied over time.
Source: Business Standard
