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Measuring Manufacturing
Bringing attention back to the manufacturing sector and to the statistics available to understand it, this analysis presents the differences in size and rates of growth of the sector when measured using the new National Accounts Statistics series (2011–12) and the Annual Survey of Industries. Clearly, changes in methods of measuring (for instance, the shift from the establishment approach to the enterprise approach) have introduced unexplained changes into measures of the manufacturing sector.
The author wishes to thank Vijayata Sawant for statistical assistance.
The manufacturing sector was singled out by commentators who discussed the new National Accounts Statistics (NAS 2011–12) series, as this sector showed accelerated growth since 2012–13, in sharp contrast to the sector’s sluggish growth as per the Index of Industrial Production (IIP). On the differences in the sector’s growth rates from one data set to another, officials from the Central Statistics Office (CSO) cautioned that the existing IIP (2004–05=100) did not adequately reflect manufacturing growth in recent years (Anant 2016). The IIP is volume-based, whereas NAS considers value addition; the available IIP has a base year 2004–05, whereas the NAS series has been rebased to 2011–12; and more importantly, the current IIP has an outdated product basket and weighting diagram, compounded by the infirmities built in collection of data, which reduces its reliability.
Alternatively, one could compare the performance of the manufacturing sector in the new NAS series with the Annual Survey of Industries (ASI) to gain a better understanding of the sector’s growth scenario. In the previous NAS series, the ASI used to be the principal source of data for deriving manufacturing output and gross value added (GVA), particularly of the registered segment. In the NAS 2011–12 series, the CSO has changed its approach to define a unit of administration (or analysis) for data compilation from the establishment approach to the enterprise approach, and also data sources. As per the enterprise approach, it is a company that becomes a unit of administration though it may own several factories which were earlier individually counted as establishments. Adoption of the enterprise approach has also necessitated a changeover to MCA21 database, which is an e-initiative of the Ministry of Corporate Affairs (MCA), to give fuller effect to mandatory filings of annual financial statements by registered companies.