Revision of Base Year of All India Index of Industrial Production

The Committee of Secretaries (COS) in its meeting held on 10th May, 2011 approved the release of the new series of Index of Industrial Production (IIP) with 2004-05 as its base and directed that the new series of IIP may be released for the month of April, 2011onwards. Accordingly IIP new series is released today i.e 10th June, 2011, which is the Quick Estimate (QE) of IIP for the month of April, 2011. The time series indices for the period of April, 2005 to March, 2011 are also released along with the QE of April, 2011 index. Though the Q.E. of the IIP pertaining to the old series of IIP (Base: 1993-94=100) is also made available through this Ministry’s website for comparison and academic purposes, the same will be discontinued from the month of September, 2011 onwards. In other words, the Q.E. of IIP pertaining to 1993-94 series will be provided only upto the month of August, 2011, which will be the Q.E. of IIP for the month of June, 2011.

The revision of base year of IIP was undertaken based on the recommendations of the Standing Committee on Industrial Statistics (SCIS), constituted by the Ministry of Statistics & PI. The SCIS includes members from concerned Ministries, and it is presently chaired by Dr. Biswanath Goldar, Professor, Institute of Economic Growth. The National Statistical Commission (NSC) also recommended revision of base year of IIP to 2004-05.

Some of the salient features of new series of IIP are as follows:

A representative item basket comprising 682 individual items has been selected for the new series of IIP. Further, and a new weighting diagram which better reflects the present structure and composition of the industry due to changes in the technology, economic reforms and production behaviour over time, is derived for the new series.

The new series of IIP covers the sectors of mining, manufacturing and electricity in its scope as in the current series. For the compilation of sectoral weights for these three main sectors, GDP at factor cost available from the National Accounts Statistics (2010) is used.

The result of the Annual Survey of Industries (ASI): 2004-05 is used as the basic frame for the selection of products for the manufacturing sector. However, for deciding the industry level (NIC 2 digit) weights of the manufacturing sector, the estimates of Gross Value Added (GVA) as per ASI: 2004-05 for the organised manufacturing sector and as per the 62nd round of the National Sample Survey for the unorganised manufacturing sector are used.  The number of items, item groups and weights as per different industry groups pertaining to the new series of IIP is at Annexure-I.

Sector wise comparative statements of weights, no. of items and item groups between the current series and new series are in the following table:

Table –I: Sector wise comparative items and weight

Sl. No.	Sector	Items		Item groups		Weight
		1993-94	2004-05	1993-94	2004-05	1993-94	2004-05
1	Mining	64	61	1	1	104.73	141.57
2	Manufacturing	473	620	281	397	793.58	755.27
3	Electricity	1	1	1	1	101.69	103.16
4	Total	538	682	283	399	1000.00	1000.00

The monthly production data for the compilation of new series of IIP are being made available to the CSO by sixteen (16) source agencies viz . Indian Bureau of Mines (IBM), Directorate of Sugar, O/o the Salt Commissioner, Directorate of Vanaspati, Vegetable Oil & Fats, Tea Board, Coffee Board, O/o the Textile Commissioner, O/o the Jute Commissioner, O/o the Coal Controller, M/o Petroleum, O/o the Joint Plant Committee (Iron & Steel),  Railway Board,  D/o Industrial Policy & Promotion, D/o Chemicals & Petrochemicals, D/o Fertilizers and Central Electricity Authority. The number of items, item groups and weights as per different source agencies pertaining to the new series of IIP is at Annexure-II. Out of these, the Indian Bureau of Mines compiles the monthly indices for the mining sector and supplies the same to the CSO, which is suitably dovetailed with the indices for manufacturing and electricity sectors to arrive at the general index.

Some of the important items newly included in the series basket are ‘Milk, skimmed, pasteurised’, ‘Rice’, ‘Cattle and poultry feed’, ‘Woollen carpets’,  ‘Apparels’, ‘Writing & printing paper’, ‘Newspapers’, ‘Propylene’, ‘Purified terephthalic acid’, ‘Complex grade fertilizers’, ‘Paraxylene’, ‘Antibiotics & it's preparations’, ‘Polythene bags incl. HDPE & LDPE bags’, ‘Glass sheet’, ‘Refractory bricks’, ‘Marble tiles/slabs’, ‘Grinding wheels’, ‘Aluminium’, ‘Steel structures’, ‘Heat exchangers’, ‘Insulated cables/wires all kind’, ‘Colour TV sets’, ‘Lens of all kinds’, ‘Wood furniture’, ‘Coir mats & matting’, ‘Gems and jewellery’, ‘Copper and copper products’, ‘Poly vinyl chloride’, ‘Polypropylene( incl. co-polymer)’ and  ‘Molasses’.

Major changes due to base revision

The base year of IIP for the new series is 2004-05, as against 1993-94 for the old series.

The weighting diagram has undergone change due to base revision.

The total coverage of products has increased at the overall level.

National Industrial Classification (NIC)-1987 was used in the old series whereas for the new series, NIC-2004 is used. As such, at industry level, monthly index and their growth is being published for 22 industry groups for the new series, whereas for the old series, the monthly index and growth was released for 17 industry groups.

14 out of 15 source agencies are retained in new series. Department of Chemicals & Petrochemicals and Department of Fertilizers are included in the new series as independent source agencies because of growing importance of their respective industries. Ministry of Micro, Small & Medium Enterprises (MSME) is presently excluded as a source agency for new series of IIP, though bigger units of MSME sector, which are part of the coverage of Annual Survey of Industries (ASI) are already included in the item basket. CSO held dialogues with the representatives from O/o the Development Commissioner (MSME) for identifying products and units from the recently completed 4th all India Census cum Survey of MSME sector and accordingly putting in place a new system of regular monthly collection of data. After the system of data collection is in place, DC (MSME) may develop the index for the MSME sector separately, for which CSO would provide necessary technical guidance. Once DC (MSME) is ready with the index, this monthly index for the MSME sector can be dovetailed with the General Index of All-India IIP by assigning a proper weight through suitable methodological framework. This view was also endorsed by the COS.

Annexure-I

Industry group wise number of items, item groups and weights

NIC-04	Industry	No. of items	No. of item groups	Weights
15	Food products and beverages	54	46	72.76
16	Tobacco products	5	5	15.70
17	Textiles	58	23	61.64
18	Wearing apparel; dressing and dyeing of fur	3	2	27.82
19	Tanning and dressing of leather products	30	6	5.82
20	Wood and of wood products except furniture	4	4	10.51
21	Paper and paper products	17	8	9.99
22	Publishing and printing	4	2	10.78
23	Coke, refined petroleum products & nuclear fuel	16	16	67.15
24	Chemicals and chemical products	96	89	100.59
25	Rubber and plastics products	37	25	20.25
26	Other non-metallic mineral products	27	14	43.14
27	Basic metals	61	30	113.35
28	Fabricated metal products, except machinery and equipment	15	13	30.85
29	Machinery and equipment n.e.c.	65	42	37.63
30	Office, accounting and computing machinery	6	4	3.05
31	Electrical machinery and apparatus n.e.c.	41	27	19.80
32	Radio, TV and communication equipment & apparatus	8	8	9.89
33	Medical, precision and optical instruments, watches and clocks	16	10	5.67
34	Motor vehicles, trailers and semi-trailers	30	5	40.64
35	Other transport equipment	14	12	18.25
36	Furniture; manufacturing n.e.c.	13	6	29.97
Total manufacturing		620	397	755.27

Annexure-II

Source agency wise number of items, item groups and weights

S.No.	Source Agency	No. of individual Items	No. of  Item groups	Weight
1	Indian Bureau of Mines	61	1	141.57
2	Directorate of Sugar	1	1	15.25
3	O/o the Salt Commissioner	1	1	0.53
4	Directorate of Vanaspati, Vegetable Oils & Fats	11	11	9.17
5	Tea Board	1	1	6.51
6	Coffee Board	1	1	0.35
7	O/o the Textile Commissioner	44	13	52.10
8	O/o the Jute Commissioner	11	7	4.07
9	O/o the Coal Controller	3	3	2.96
10	M/o Petroleum	11	11	59.39
11	Joint Plant Committee (Iron & Steel)	47	21	92.07
12	Railway Board	6	6	2.20
13	D/o Industrial Policy & Promotion	430	268	456.26
14	D/o Chemicals & Petrochemicals	47	47	41.87
15	D/o Fertilizers	6	6	12.54
16	Central Electricity Authority	1	1	103.16
	TOTAL	682	399	1000

Sector-wise growth of the Indian Economy

ESCAP 2011 INDIA REPORT

Strong growth further improves in 2010
The economy of India maintained a strong and steady growth momentum throughout the current global economic crisis, unlike many other emerging market economies where growth decelerated sharply and, in some cases, turned negative. GDP growth of 8.0% in 2009 is estimated to have strengthened to 8.6% in 2010. The economy is projected to grow at 8.7% in fiscal year 2011, with private consumption and investment demand being the two major drivers of growth.

High inflation is a major challenge as food prices rise rapidly
A sharp increase in inflation in India in 2010 has been a particular cause for concern following a major surge in food prices in 2009. Average inflation in 2009 was in the double digits. Consumer price inflation (for industrial workers) is estimated at 11.0% for the first nine months of fiscal year 2010 and food prices, which are heavily weighted in the consumer price basket, remained elevated in 2010.

Budget deficit remains high but fiscal consolidation is taking place
Although budget deficits in South Asia were already high prior to the global crisis, governments had little choice but to run up yet higher deficits as a means of countercyclical stabilization. It is important that governments prepare and implement fiscal consolidation plans to contain their budget deficits and growing public debt. India has already devised such a plan, within which a budget deficit of 5.1% of GDP in 2010 was well within the target of 5.5% of GDP. The deficit is expected to come down further to 4.6% of GDP in 2011.

Exports revive but imports grow more rapidly
In India, exports and imports began to expand from October/November 2009 after a continuous decline for nearly a year as a result of global economic crisis. In fiscal year 2010, export growth exceeded import growth. Due to the significantly larger size of imports, however, the trade deficit widened. The net invisible surplus also shrank. As a result, the current account deficit could increase in 2010 from 2.8% of GDP in the previous year.
Capital inflows in the initial months of fiscal year 2010 moderated somewhat. Given the strong growth outlook of India, capital inflows are expected to accelerate in 2011. To deal with the adverse ramifications of capital flows, India has, in the past, used a mix of a flexible exchange rate, sterilization of the impact of inflows on domestic liquidity, a cautious approach to the liberalization of the capital account and the cushion of its large foreign exchange reserves. This approach is expected to continue in 2011.

Some major policy challenges
High inflation rate can compromise the achievement of sustained high growth rate. Containing inflationary pressures should therefore be a priority in the policy agendas of governments. Both demand- and supply-side factors have contributed to inflationary pressures. A combination of monetary, fiscal and other measures is needed to reduce price pressures. Repeated supply shocks pose a constant challenge to sustaining a low inflation regime. A more medium-term approach is needed in order to augment the supply of items of mass consumption by addressing structural supply constraints.
Strong and sustained growth momentum is needed in South Asia to tackle the long-term problem of widespread poverty. Over the past few years, most countries have made progress in reducing poverty. Even today, however, at least one in every three persons in South Asia is classified as poor. The fight against poverty therefore must continue. Countries need to continue pursuing economic reforms to improve productivity, strengthen public institutions, improve economic governance, and build social safety nets to protect the more vulnerable segments of the population. To promote more inclusive growth, the provision of basic services such as health and education and the generation of ample employment opportunities should remain the principal priority in the policy agendas of all governments. Growth cannot be sustained in the long run if it is not inclusive.
On the physical infrastructure side, one of the biggest challenges being faced by several countries in South Asia is improving the electricity supply. Both short-term and long-term measures are needed to tackle the electricity problem. In the subregion, transmission and distribution losses vary from 20% to 40% in different countries and theft of electricity is a major problem. There is therefore a need for greater efficiency on both the generation and distribution sides. The promotion of regional cooperation in the energy sector can benefit the participating countries enormously.
Concerning electricity pricing, some countries have been providing substantial subsidies, but they are being withdrawn. This process has been raising the cost of living, though, and there is a need to provide some form of protection to the poor. Tariff rates somehow need to be kept affordable for small consumers. It is also worth considering a more targeted approach to providing subsidies following the pattern of food stamps, where electricity stamps or coupons can be given to the poor to pay their electricity bills.

Extension of medical facilities to beedi workers under Rashtriya Swasthya Bima Yojana

The Cabinet today approved extension of medical facilities to beedi workers under the Rashtriya Swasthya Bima Yojana (RSBY). The beedi worker and his family (unit of five) will be covered and the total sum insured would Rs.30,000/-. The other benefits and procedures under the scheme will be the same as under RSBY. Any claims beyond Rs.30,000/- will be reimbursed directly by the related Welfare Commissioner to the concerned empanelled hospital through the existing procedure.

The estimated expenditure to be borne by the Central Government is approximately Rs.311.25 crore (this includes 75% of the premium and the cost of the smart cards). The annual premium is estimated at Rs.750 per annum of which 75% would be as Central share and the State Government’s share would be 25%.

The State Government will identify and register beedi workers. It is proposed to cover 10 lakh beedi worker in the current financial year and cover 100% of the total beedi workers by the year 2013-14.

At present, the health needs of these beedi workers are being met through 204 dispensaries and only 7 hospitals. The beedi industry is primarily a home based labour intensive industry which provides employment to about 55 lakh workers (out of which Identity Cards have been issued to 49.80 lakh beedi workers) mainly in the States of Andhra Pradesh, Bihar, Jharkhand, Gujarat, Karnataka, Kerala, Madhya Pradesh, Chhattisgarh, Maharashtra, Orissa, Rajasthan, Tamil Nadu, Uttar Pradesh, Assam, Triupra and West Bengal. The Beedi Workers Welfare Fund Act, 1976 has been enacted to provide for financing of measures to promote the welfare of beedi workers. Several welfare schemes ahve been formulated under the Beedi Workers Welfare Fund to extend Health care, Housing, Educational, Social Security benefits etc., to beedi workers and their family members.

Background:

The beedi worker is not in a position to spend money from his own pocket initially and get the reimbursement. As such, the existing health schemes do not serve the very purpose of proper health care. On the other hand, majority of the beedi workers do not fall under the BPL category. Hence, they are deprived of the benefits of Rashtriya Swasthya Bima Yojana (RSBY), presently implemented for BPL category only.

Keeping in view the Social Security to be provided for unorganised sector workers including beedi workers, it is proposed to bring all beedi workers under the net of RSBY, as a beneficiary of RSBY to get cashless benefit in any of the empanelled hospitals throughout India.

PM Chairs High Level Committee on Manufacturing

The draft National Manufacturing Policy was given in-principle approval at a meeting of the High Level Committee on Manufacturing, held under the Chairmanship of the Prime Minister and attended by the Finance Minister, Commerce and Industries Minister, Deputy Chairman, Planning Commission, Ministers for Environment and Forests, Corporate Affairs, and the Chairman of the Economic Advisory Council.

Commerce and Industries Minister presented the draft Manufacturing Policy prepared by the Department of Industrial Policy and Promotion, in consultation with the NMCC and the Planning Commission. This draft Policy has been finalized after stakeholder consultations with concerned Ministries, State governments and industry associations.

The Policy has, as its objectives, the increase in the sectoral share of manufacturing in GDP from the present 16% to at least 25% by 2025 and increase in the rate of job creation in manufacturing to create 100 million additional jobs by 2025.

The creation of National Investment and Manufacturing Zones (NIMZs), as mega investment regions equipped with world-class infrastructure, has been proposed as a major policy instrument.

The Prime Minister observed that the policy measures proposed would reduce the compliance burden on industry. At the same time, these measures have to be formulated while adequately taking care of the environmental and labour welfare concerns. He directed that these issues may be further discussed at the Ministerial level. He further directed that this consultation process may be completed within one month, so that the National Manufacturing Policy can be brought before the Cabinet and the final Policy announced, which will send a positive message to the investing community.