By: Rashi Anchalia, Junior Consultant, Office of Economic Advisor, Government of India & Manoj Pandey, Junior Statistical Officer, DPIIT, Ministry of Commerce and Industry, Government of India
Economic indicators rarely attract public attention, but they quietly shape how the economy is understood and governed in real time. The Index of Industrial Production (IIP), one such measure of industrial activity, is now being revised to reflect more recent economic conditions, with the base year updated from 2011–12 to 2022–23 following the official launch of the new series on June 1, 2026.
What the IIP is, and why it matters
The Index of Industrial Production (IIP) is a measure that shows how India’s industries are performing over time. It tracks changes in the output of factories, mines, and electricity generation. To keep it relevant, the government updates it periodically to reflect changes in the economy, adding new industries, removing outdated ones, and improving how it is measured. Manufacturing forms the largest part of this index, which is why the IIP is closely watched as a signal of how industrial activity is doing in the country. A group of core industries such as steel, coal, electricity and cement account for 40% of the IIP ‘s total weight, which plays an important role in shaping the overall trend. The IIP is closely tracked by policymakers, including the Reserve Bank of India, which uses it as one of the inputs in monetary policy decisions. Its effects extend into monetary policy, fiscal allocation and investor sentiment. A weak IIP reading can dampen manufacturing policy confidence and ripple into monetary decisions and GDP projections.
What the new series proposes to change:
The revision aims to improve the index by updating sectoral coverage, revising items and weights, enhancing factory representation, and strengthening statistical methodology. The base year revision is aligned with the national accounts to maintain consistency across major macroeconomic indicators. The new series will include electricity, gas, water supply, and waste management. For the first time, it will also incorporate minor minerals and disseminate the mining index at a more granular level covering fuel minerals, metallic minerals, and non-metallic minerals. The electricity sector will also be reported in greater detail, including separate tracking of renewable and conventional power generation. Gas supply data will be compiled using information from the relevant ministries to ensure comprehensive coverage.
The product basket is being modernised. Items from factories that no longer exist are being removed, and new sectors from the clean-energy and digital economy are being added. Currently, the IIP sample includes several non-operational units or units that have changed their production lines, which distorts the index. The revised series addresses this by using a dynamic substitution mechanism to replace defunct units.
A significant methodological upgrade proposed in the new series is the adoption of a chain-based index framework. In an economy shaped by rapid technological advances, shifting supply chains, and evolving consumption patterns, fixed weights become outdated quickly. A chain-based index updates weights more frequently, typically every year, ensuring that the index captures the changing structure of industrial output. Instead of measuring all future production against a single base year fixed far in the past, the new approach links changes year-by-year. As a result, expanding sectors receive appropriate weight, while shrinking ones gradually lose influence, keeping the index responsive to structural shifts.
The revised series also proposes the introduction of seasonally adjusted estimates, which help filter temporary fluctuations caused by festivals, weather cycles, and other seasonal effects. This makes it easier for policymakers to understand the underlying trend in industrial activity without being misled by one-off or seasonal spikes.
A revision built through consultation, not behind closed doors.
What distinguishes this exercise from previous base year updates is the extent of the consultative process. The Ministry of Statistics and Programme Implementation (MoSPI), Government of India, held consultations across major cities with eminent economists, experts from financial institutions and the banking sector, subject-matter specialists, users of core statistics and senior officials from the Central and State Governments. The participation of this diverse group is expected to enrich the discussions and familiarize users with the changes in the revised series.
Measuring the economy we actually have
India’s ambition to become a developed economy by 2047 requires not just targets, but accurate tools to measure progress. The rebasing of national accounts to 2022–23 does not change what India produces. What it changes is how accurately we see it, and for evidence-based governance, that distinction is critical. As India’s industrial landscape shifts with new sectors rising, supply chains reconfiguring, and technology reshaping production, the tools used to track industrial activity must evolve as well. Manufacturing sits at the center of this story. As India pursues its long-term ambition of becoming a developed economy, the signals are already turning favorable. Growth projections have been revised upward by institutions like Fitch, the IMF, and S&P Global. Recent manufacturing indicators have also remained encouraging. The sector has held its momentum even as global headwinds intensified, a resilience that reflects both structural reform and deepening industrial capability. The policy architecture supporting this trajectory is substantial. The Production Linked Incentive (PLI) scheme, the National Manufacturing Mission, and targeted skill development initiatives together form a coherent industrial strategy, one designed not just to expand output but to upgrade the quality and complexity of what India produces. The external environment, for once, is cooperative. Global supply chains are undergoing their most significant strategic realignment in decades, driven by geopolitical friction, risk diversification, and the limits of single-source dependence. India has a genuine and time-sensitive window to step into that gap not merely as a low-cost assembly destination, but as a hub for investment, innovation, and advanced manufacturing. The moment demands more than incremental ambition. Becoming a preferred manufacturing destination is a waypoint, not the destination. The real prize is leadership industrial, technological and institutional built on an economy sophisticated enough to compete at the frontier and a measurement system honest enough to show us exactly where we stand. The revision is more than a technical exercise. It is an affirmation that India’s statistical system is willing to recalibrate, adapt, and improve. That commitment to accuracy is the quiet foundation on which sound economic governance must rest.
The views expressed in this article are personal. Rashi Anchalia is a Junior Consultant at the Office of the Economic Advisor, Government of India; Manoj Pandey is a Junior Statistical Officer at the DPIIT, Ministry of commerce and industry, Government of India