India Plans Seasonal Adjustment for Industrial Output Data in Statistical Revamp

New Delhi – India is preparing a significant overhaul of how it reports industrial activity, with the statistics ministry proposing the introduction of seasonally adjusted industrial output data to provide clearer and more reliable monthly economic signals.

The move aims to reduce distortions caused by factors such as shifting festival dates, variations in working days, and predictable seasonal patterns that often cloud the interpretation of raw industrial numbers.

At the center of the proposal is the Index of Industrial Production, one of India’s most closely tracked economic indicators. The index measures output across manufacturing, mining, electricity generation, capital goods, and other industrial segments that collectively reflect the health of the economy.

Currently, India publishes only unadjusted monthly industrial data. While useful over longer periods, these figures can swing sharply from month to month due to events like Diwali or changes in holiday calendars, making it harder for policymakers, investors, and analysts to identify real underlying trends.

The statistics ministry believes that publishing a seasonally adjusted version of the index would help separate genuine changes in industrial momentum from temporary or calendar-driven fluctuations. By stripping out predictable seasonal effects, the adjusted data would offer a cleaner picture of economic performance.

According to the discussion paper released by the ministry, the proposed methodology would aim to improve the quality of economic signals without leading to excessive or confusing data revisions. The goal is to balance greater accuracy with stability in reported figures.

Seasonal adjustment is widely used by statistical agencies around the world, particularly in advanced economies. Many international institutions encourage the practice, arguing that it enhances comparability over time and improves decision-making for governments and markets alike.

The proposal forms part of a broader effort by the Indian government to modernize key economic data series. This includes revising base years, updating survey samples, and refining methodologies to better reflect the structure of today’s economy rather than relying on outdated benchmarks.

As part of this revamp, the base year for the Index of Industrial Production is set to be updated to 2022–23 from the current 2011–12. Officials say this change is necessary to capture shifts in industrial composition, technology adoption, and production patterns over the past decade.

The ministry has invited feedback from stakeholders on several aspects of the proposal, including how to treat disruptions caused by the pandemic period and which holidays or festivals should be included in seasonal adjustments. Responses are being sought by mid-February.

This consultative approach signals that the government is keen to align India’s industrial statistics with global best practices while taking into account the country’s unique economic and cultural context. Festivals, for instance, play a much larger role in shaping economic activity in India than in many other countries.

Beyond seasonal adjustment, officials have previously suggested other reforms to improve data accuracy. These include replacing closed or inactive factories in survey samples with operational units and reviewing sectoral weights more frequently to reflect changing industrial dynamics.

Such measures could help ensure that the index remains representative of actual production activity, especially as new industries emerge and others decline. More frequent updates may also reduce the need for large revisions down the line.

The timing of the proposal is notable, as recent industrial data has shown strong momentum. Industrial output expanded at its fastest pace in more than two years in December, reinforcing the importance of clear and reliable indicators to assess whether growth is sustainable.

Economists say that if implemented carefully, seasonally adjusted industrial data could improve policy responses, enhance transparency, and boost confidence among investors tracking India’s economic trajectory.

The planned changes underline India’s push to strengthen the credibility and usefulness of its official statistics as the economy grows in size, complexity, and global integration.