Managing non-response/ missing data: There is need to take all possible steps to minimize non-response/missing data More efficient

estimation procedure(s) than those followed at present should be developed for reliable estimation of production of non-responding units, which would, in turn, result into a more reliable series of IIP.

(Paragraph 2.56) 7. Updating the weights for the All India IIP: Data availability is an important consideration in deciding the frequency at which the weights are updated for the product groups and industry branches of the IIP. For the All India IIP, Gross value added, as published in the National Account Statistics (NAS), is used as the weighting variable at the industry level. Currently the annual Gross value added estimates at the industry level for registered manufacturing in the NAS are based on the results of the Annual Survey of Industries (ASI) as soon as these are available. The data on Gross value added per worker for unregistered manufacturing are, however, available at approximately five yearly interval from the survey conducted by the NSSO as a follow-up survey to the Economic Census and are used whenever the base year for National Accounts Statistics is updated. It is recommended that the frequency of follow-up surveys to the Economic Census needs improvement, at least to alternate years in the inter-census period (usually about 5 years) so as to obtain more reliable estimates of Gross value added per worker for the unregistered manufacturing for use in the annual estimates of Gross value added in manufacturing. It is then possible to update the industry level weights for the All India IIP on an annual basis, using the Gross value added estimates as published in the annual NAS. In the All India IIP, allocation of weights to the items within 4-digit industry groups is done using “value of output” available from ASI and, therefore, there is no problem in updating the product/item groups’ weights frequently, at least every 5 years. If these measures are taken, shifting from the present unsatisfactory fixed base Laspeyres Index with inordinately long delay in the revision of base year to the Chained Laspeyres-type volume index with annually updated industry level weights and frequently (at least five yearly) updated product group level weights will be feasible for the compilation of the All India IIP. It is then possible for India to derive benefit from the most important recommendation on index compilation in the IRIIP 2010. Guidance is provided in the IRIIP2010 on the implementation of the recommended approach – an annually chained IIP of the Laspeyres type with particular emphasis on procedures relevant to transition from a fixed weight index.

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In the light of the above discussion, it is recommended that:

A shift from the present fixed base Laspeyres Index to the Chained Laspeyres-type volume index with annually updated industry level weights and frequently (at least five yearly) updated product group level weights should be planned and implemented in the medium term (five year period) to improve the methodology in compilation of the All India IIP and better reflect the changing face of India’s industrial sector.

(Paragraphs 2.65 & 2.66) 8. Problems in the quality of weights used for the All India IIP: It is noted above that the ASI is the major data source for the weights used in the All India IIP at both the industry and product group levels. The reliability of these weights, therefore, depends on the quality of estimates of Gross value added of industries at 4 digit level of NIC and value of output of product groups, derived from the ASI. The quality of these estimates is in turn impacted by the representative character of the set of surveyed units in the ASI. There are problems in selecting a representative set of units for collecting data in the ASI because of the imperfections in the sampling frame used for the ASI. The sampling frame of ASI is based on the lists of factories/units maintained by the Chief Inspectors of Factories (CIF) in the States. The CIF lists, however, suffer from two types of deficiencies: (a) many units that are eligible to be listed in the CIF list are not included in it; and (b) the units that have not been operating for quite some time are not removed from the CIF list.

It is recommended that: The CIF lists be replaced by the Business Register, to be developed following the proposed sixth Economic Census 2011,for preparing a sampling frame of industrial units from which a representative and efficient sample of units can be drawn for collection of data in the ASI. The above recommendation will: (i) be in accordance with that made in the International Recommendations on Industrial Statistics 2008; (ii) ensure that the same sampling frame is used for the ASI as well as for the recommended survey on collection of monthly production data for use in the compilation of the All India IIP and (iii) improve the quality of the weights used in the All India IIP.

(Paragraphs 2.67, 2.68, 2.70 & 2.71) 9. Seasonal adjustment: Taking into account the international recommendations and the requests from major public and private users, following recommendations are made:

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• Seasonal adjustment of All India IIP should be taken up as an official responsibility by the CSO.

• Only the finally revised series of the All India IIP should be used for seasonal adjustment.

• Experimenting with various possible alternative methods and subjecting the seasonal adjustment results to validation using a wide range of quality measures, evolve an appropriate method of seasonal adjustment. Among others, the absence of residual seasonal and/or calendar effects as well as the stability of the seasonally adjusted pattern has to be carefully assessed. The results of the experimental exercises may be released as a research study.

• Release the official seasonally adjusted series of the All India IIP along with details of the methodology used.

(Paragraph 2.74) 10. Reconciliation of IIP data with other data sources: The CSO, being directly accountable to the public for the results of the All India IIP, ASI and NAS, should undertake regular reconciliation exercise of All India IIP data with those of ASI and NAS to identify any significant quality issues and place the results of reconciliation first before the Standing Committee on Industrial Statistics (SCIS) and thereafter in public domain.

(Paragraph 2.82) 11. Presentation of the IIPdata: Neither trading day adjusted data series nor seasonally adjusted data series is published for the All India IIP. It is recommended that these be attempted and after stabilizing the methodologies published along with the adopted methods. After the meeting with the users of All India IIP held on 2 December, 2010 as part of the present statistical audit process, based on the suggestion of the users the CSO started indicating the main items responsible for the increase/decrease in the growth of the IIP in the monthly Press Note on IIP. This practice should be continued.

(Paragraph 2.84) 12. Dissemination of the IIP: A reference to the place (or website) of availability of metadata of All India IIP should be included in the Press Note on IIP. Contact details of relevant statisticians who can answer various questions by users be included in the Press Note of the All India IIP.

(Paragraph 2.88)

13. Data revisions: Detailed documentation of revisions carried out in the