What is the Index of Industrial Production (IIP) in India?

The IIP is India's key barometer of manufacturing vitality, which has failed to keep pace with the country's industrial transformation in recent years.

How does the informal sector contribute to India's economy?

The informal sector contributes approximately 45% of India's GDP and employs nearly 90% of the workforce, yet it remains underrepresented in the IIP.

What are the plans to modernize the IIP in India?

Experts recommend integrating new data sources like the Goods and Services Tax (GST) network and the Unified Payments Interface (UPI) to capture the informal sector, as well as using big data analytics and machine learning to enhance the quality of the index.

Home / Business and Economy / India's Industrial Transformation: Measuring the Unmeasured

India's Industrial Transformation: Measuring the Unmeasured

11 Nov

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Summary

India's manufacturing landscape has evolved, but official statistics lag behind
Informal sector contributes 45% of GDP, yet remains underrepresented in data
Revising the Index of Industrial Production (IIP) to reflect digital, renewable, and high-tech industries

India's Industrial Transformation: Measuring the Unmeasured

India's industrial landscape has undergone a remarkable transformation in the past decade, with the emergence of new sectors like electric vehicles, solar modules, and AI-driven manufacturing. However, the country's key barometer of manufacturing vitality, the Index of Industrial Production (IIP), has failed to keep pace with these changes.

As the Ministry of Statistics and Programme Implementation (MoSPI) prepares to revise the IIP's base year from 2011-12 to 2022-23, experts see this as a crucial opportunity to align the index with India's evolving industrial reality. The current IIP structure underestimates the contribution of emerging technologies while overstating the relevance of declining industries, distorting the perception of the nation's industrial dynamism.