2.4.1 The Industrial Sector is one of the important sectors of the economy both in terms of its spread over the economy and its contribution to the generation of income, employment, and foreign exchange earnings. Statistics relating to this sector, therefore, assume a crucial importance for policy-making by the Government and for choice of suitable strategies by the Corporate Sector. Ever since India launched its development programme with the Five-Year Plan’s framework, the importance of these statistics has been duly recognised. The emergence of a highly competitive environment, both at the national and global levels, has further increased the imperatives of ensuring the availability of adequate and reliable statistics. With the recent shift in policies from a framework of controls, permits and licenses towards a system of liberalisation and free flow of market forces through the process of economic reforms, a review of the erstwhile statistical system had become necessary. Further, with the growing erosion of discipline in the data generating system of the Government, the reliability, adequacy and timeliness of statistical data had been adversely affected. The Commission reviewed in this context the different aspects of Industrial Statistics in the country, such as the quality of statistics, institutional machinery for data collection and dissemination, the problem of marginalisation of the Statistical Wings of the different ministries, decline in the compliance profile of the respondents, and conceptual and methodological problems of data collection.
2.4.2 The Annual Survey of Industries (ASI) has been the principal source for most of the basic statistics of the Industrial Sector. However, the frame of factories, which the ASI uses for conducting the survey, is based on the list of factories maintained by the Chief Inspectors of Factories (CIF). A large number of units, which are qualified for inclusion in the CIF’s list, have not been included and at the same time many defunct units have not been removed. The data generated by the ASI system based upon this deficient ASI frame do not therefore depict the true situation of organised Industrial Sector. Urgent steps should, therefore, be taken for making the ASI frame more comprehensive by including in it all units that are eligible for registration with the CIF, followed by an appropriate updating mechanism. With the objective of generating reliable benchmark estimates at the disaggregated level, of providing an efficient weighting diagram for revision of the base year of Index of Industrial Production and also of updating the ASI frame, the Commission has recommended a one-time census of units eligible for registration.
2.4.3 The estimates of different variables of Industrial Statistics derived by the ASI are often associated with large sampling and non-sampling errors. To enhance the credibility and utility of these estimates, sampling errors need to be published along with the estimates of important survey characteristics. Further, a periodic review of the sampling design and of the sample size in the ASI must be undertaken with the objective to improve the precision of the estimates at the industry-group levels.
2.4.4 Estimates of the growth rates of industrial production based upon the Index of Industrial Production (IIP) are extensively used for policy-making at various levels in the Government and also for decision-making in the banking and Corporate Sectors. The importance of IIP is further increased due to the fact that it is the only indicator generated every month and disseminated on a wide scale. Concern has been expressed over the large divergence between the quick and the final estimates of the IIP. The IIP is compiled and released by the Central Statistical Organisation (CSO) within six weeks as per Special Data Dissemination Standards (SDDS) norms of International Monetary Fund, based on the data received from different agencies. The Commission has made a critical appraisal of the quality of the monthly IIP as an economic indicator of the general level of the industrial activity in the economy. The functioning of the source agencies providing the primary data of industrial production to the CSO is afflicted with a number of serious deficiencies. The product coverage of IIP and the administrative and institutional framework for primary data collection are much below the desirable standards. In the new policy regime of liberalisation of the Industrial Sector, the Governmental machinery’s ability to induce a good response from the industrial units for providing statistics on a monthly basis has been considerably eroded. The available legal backing by the Industrial Development and Regulation Act has also not yielded the desired response. The Commission therefore recommends that the quality of the IIP must be improved by toning-up the statistical wings of the source agencies, in particular, within the Department of Industrial Policy and Promotion (DIPP) of the Ministry of Industry, which has a considerable share in the weighting diagram. Further, the Commission has recommended exploring the possibilities of constructing an additional IIP based on bigger units, for which collection of data could be streamlined in a more effective manner than in the case of the entire Industrial Sector.
2.4.5 The need for harmonisation of the activity, product and trade data has been evident for quite some time, as this would enable a cross-classification of activity and product data. At present, there is no uniformity in the codes being used by the organisations dealing with the collection and processing of product-level data, compelling the user to refer to different documents. In this context, the Commission has recommended an urgent finalisation of the unique coding system developed by the Central Board of Excise and Customs (CBEC) based on the Harmonised System and emphasised its simultaneous adoption by all the producer and user organisations concerned with product-level data. To give wide publicity, the information on coding structure should also be made available on an extensive basis through websites and publications. The use of national classification would eliminate the multiplicity of product-level coding systems and would also enable a study of the flow of output through various economic systems apart from a cross-classification of activity and product data.