6.5.1 The indices of Unit Value and Quantum of Foreign Trade of India as well as the ‘terms of trade’ are compiled on a regular basis by DGCI&S. The three indices namely, gross, net and income terms of trade are derived from the Unit Value and Quantum of Foreign Trade indices. At present, DGCI&S is releasing the indices with base 1978-79. On account of the changes effected in the Indian Trade Classification since April, 1987, the old commodity baskets have been recast to suit the new Classification System for compilation of the index number series besides maintaining a temporal comparability.
6.5.2 A Technical Committee was set up in January 1992 for the purpose of formulation and construction of Global and Bilateral Foreign Trade indices with commodity break downs for India. The final report of the committee was submitted to the Government in January 1993. In the Report a new methodology for compilation of the unified Bilateral Foreign Trade indices was evolved and recommended for implementation. Later on, an Expert Group was constituted in the Ministry of Commerce under the Chairmanship of the then Economic Adviser, Ministry of Commerce to review the recommendations of the Technical Committee. In September 1995, the Group decided that for computing Bilateral Index Numbers, 1992-93 might be considered as the base year and the country- specific Commodity Basket may be compiled. Accordingly, the global and bilateral indices for the year 1996-97 were calculated, but could not be released as the unit of quantity in the ITC (HS)-1996 had been changed from that of ITC(HS)-1992 for many items. On account of changes in the units of commodities included in the Commodity Basket and 1992-93 being too distant to be considered as a base year, DGCI&S has decided to compile Index Numbers with 1998-99 as the base year.
6.5.3 The Commission has observed that the Technical Committee submitted its Report in 1993 and during its tenure of a year, it not only developed the methodology but also actually compiled the Bilateral Trade indices for four years. But even after a gap of more than 8 years, the revised series of indices could not be compiled and released by DGCI&S. Further, the base year of indices of Unit Value and Quantum of Foreign Trade of India being compiled at present by DGCI&S is very old (1978-79) and has a different classification, thus limiting the utility of the indices.
6.5.4The Commission, therefore, recommends that:
DGCI&S should immediately revise the current base year (1978-79) of indices of Unit Value and Quantum of Foreign Trade and the corresponding indices of terms of trade.
DGCI&S should compile and release the series of indices on Bilateral Foreign Trade following the methodology suggested by the Technical Committee constituted within a period of one year.