The Hindu Business Line : Data with holes

That the IIP does not represent the whole range of goods produced is evident from the fact that micro and small enterprises have only a minuscule representation.

With the index of industrial production (IIP) showing a growth rate of 1.3 per cent in August, the Finance Minister, Mr P. Chidambaram, has expressed doubts over the quality of data. His apprehensions are justified, although it is surprising that he did not bring this up when industrial growth was in double digits. That the IIP does not represent the whole range of goods produced is evident from the fact that micro and small enterprises, which account for 39 per cent of ma nufacturing output, have only a minuscule representation. Production data for some of the items are indirectly derived, leading to doubts on their accuracy. Weights of 1993-94 are in use today, even as Indian industry has undergone structural changes. Just as a technical group has drawn up a new wholesale price index — with a new base year, revised weights and an increase in number of items from 435 to 1224 — the same should be done in the case of IIP as well, last revised a decade ago.

As the National Statistical Commission (NSC) has observed, industry data is in a mess. While the unorganised sector remains an area of darkness, the quality of data on the organised sector is only slightly better. After liberalisation and the scrapping of the Directorate General of Technical Development (DGTD) in 1995, there is no government organisation dedicated to collecting data on large and medium units in the private sector. Estimates of output are based on surveys conducted by the Reserve Bank of India, the samples for which are small and non-representative. The Annual Survey of Industries (ASI) data, which is meant to cover all units in the organised sector, is considered unreliable. Unorganised sector output is estimated on the basis of an economic census carried out every five years, with ‘enterprise surveys’ in intervening years to update the data. Various studies have questioned the reliability of these estimates. When census-based data leave much to be desired, sample surveys and indices such as WPI and IIP become all the more important, as they are used to scale up data from an earlier census estimate.

The fact that there has been restructuring in post-reform years, with entire industries fading out and making way for new ones, has made data gathering that much harder. A statistical wing dedicated to compiling data on large and medium units should be set up to make up for the absence of DGTD.

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