NEW DELHI -- India plans to launch a new industrial output index in June that will reflect April's factory output growth, underscoring the country's recent attempts to add, or refresh, a slew of macroeconomic indicators to help policy makers better assess economic trends.
"How many articles will be included in the new index will be decided Tuesday when the Committee of Secretaries meet," M.C. Singhi, senior economic adviser to the Ministry of Commerce and Industry, said on Monday.
The new series is expected to have more than 300 items as against the current index's 213 and shift its base year to 2004-05 from 1993-94, aligning itself with the recently launched monthly wholesale price index and a consumer price index for rural and urban workers.
Industrial output readings have come under severe criticism from economist
s who blame the archaic composition of the index and non-reliable data collection methods for volatile prints.
In 2010, the readings have swung from 11.30% in October to 3.62% in November.
The most-recent February reading that rose 3.6% from a year earlier was sharply below the median estimate of a 5.2% rise in a poll of 15 economists.
Collecting quality data is extremely difficult in an economy with such a large income disparity and undergoing rapid structural change. A majority of India's 1.2 billion people lives in rural areas on less than $2 a day, which mostly goes toward food. A fast-growing urban middle class, meanwhile, is spending a larger portion of its income on electronics, cars and other trappings of a developed economy.
The proposed index will try to address some of these issues, as it seeks to include personal computers and mobile telephones replacing obsolete type writers and sewing machines.
"Ideally, once the index is revamped with a larger and more relevant basket of products, we should see a higher industrial growth rate, specially in consumer durables," said Amol Agarwal, economist at STCI Primary Dealership.
The change in the base year will also bring the factory output data in line with the gross domestic product number wholesale price index, which will make its easier to interpret the data and add relevance to the print, he added.
0 comments:
Post a Comment