India Eyes Major IIP Overhaul: Chain-Linking to Align with Global Standards

• Government is considering shifting the Index of Industrial Production (IIP) from a fixed-base to a chain-linked methodology.
• The current IIP uses 2011-12 as its base year, which can become less representative as industrial structure evolves.
• A chain-linked IIP would update the effective base year annually, using more recent weights to reflect the current industrial landscape.
• This move aims to align India's industrial statistics with international norms, as many advanced economies already use chain-linking.
• Potential trade-offs include loss of additivity and more frequent revisions to IIP numbers over a two-year period.

Why It Matters: India plans to modernize its industrial activity measurement by adopting chain-linked IIP, aligning with global standards.