Government Proposes Major Overhaul of IIP to Reflect Factory Closures

The Indian Ministry of Statistics and Programme Implementation (MoSPI) has proposed a major overhaul of the Index of Industrial Production (IIP) calculation to account for factory closures. Under the plan, factories reporting zero production for three consecutive months or permanently shutting down would be replaced with operational ones in the IIP sample. Currently, closed factories account for 8.9% of the index, creating reliance on estimation methods and affecting continuity. The IIP, alongside the Consumer Price Index (CPI), is a key economic indicator closely monitored by policymakers. MoSPI has invited feedback on the proposal by November 25 to ensure a robust, well-supported methodology.