NEW DELHI: Soon after the overhaul of index of industrial production (IIP) for the formal sector, govt machinery is preparing to enter the statistical blind spot of the vast informal economy. The statistics ministry is finalising plans to launch an entirely new index designed to measure monthly industrial production, specifically for the country’s vast informal manufacturing sector, along with a parallel index tracking production and economic output across the informal service sector, officials told TOI.“The data architecture for these new series will draw extensively from latest surveys, such as the Annual Survey of Unincorporated Sector Enterprises (ASUSE) and Periodic Labour Force Survey (PLFS). Their local sample sizes will be expanded to get a clear picture of production in the vast unorganised sector, which is the mainstay for millions of people,” an official said.Earlier, TOI reported that govt is working to release the first-ever index of services production (ISP) around July, which will help assess short-term movement in production in the formal services sector, complementing the new IIP series, with the revised 2022-23 base year, which was unveiled on Monday.Currently, India’s statistical machinery calculates the growth in the informal sector using proxy methods, where it is assumed that it mirrored the performance of the formal sector. This proxy method creates significant distortion, especially in the aftermath of economic shocks like Covid pandemic, where informal enterprises were hit hard and suffered lag in recovery. As a result, these new indices will allow policymakers to create distinct economic deflators, ensuring real GDP growth figures reflect actual conditions.“The new indices will take time to formulate. It’s in early stages of discussion, though NSO remains committed to providing better data for improved governance. Informal sector, which is quite large, needs to have better metrics to help policymakers formulate schemes and programmes,” the official said.
