THE HINDU Editorial Vocabulary-May 16, 2017- Topic 1

Timely refresh

On the growth of industrial output

The latest revisions to the base year for the Index of Industrial Production and the Wholesale Price Index reveal an overall macroeconomic picture that is at once heartening, given the underlying resilience reflected in the data. IIP data founded on the new base year of 2011-12 show that industrial output has grown annually at an average pace of 3.82% over the last five fiscal years, with a 5% rate of growth in the 12 months ended March 2017. 

Contrast this with the 1.42% average pace based on the previous 2004-05 base year, with 2016-17 showing a paltry 0.7% expansion. It is clear that the change in the base year with accompanying changes to weights of the component sectors, and restructuring of the individual sectoral constituents have all helped signal industrial activity as having been far more robust over the entire time period than had been previously posited. The caveats and explanations too need to be mentioned upfront. For one, the simultaneous updating of the base year for WPI to the same 2011-12 means the deflator applied to the 109 items captured in value terms in the new IIP (54 in the older series) has also changed, with a more benign wholesale inflation reading automatically lifting the value of the corresponding industrial item. Also, the Central Statistics Office makes clear that the growth rates of the two series are not strictly comparable since the indices for 2011-12 have been normalised to 100 at a monthly level. The breadth and relatively contemporary nature of the data capture — with an increase in the number of reporting factories and the exclusion of shuttered units and restructuring of the items basket — has meant that the information is now appreciably more representative.

Manufacturing sees its weight in the index raised by slightly more than 2 percentage points to 77.63%, while electricity, which now includes renewable sources, has had its weight pared to just under 8% in the new series. And most interestingly, a mechanism in the form of a Technical Review Committee has been put in place to periodically review the products featuring in the item list and to revise the series dynamically. The reviews, to be undertaken separately for both the IIP and the WPI, will help ensure that data pertaining to industrial output and wholesale price inflation will be relatively current and more accurately reflect economic trends. It would be interesting to see to what extent the recent divergence between the IIP and the GDP numbers will narrow, or even disappear, with the new series. While the significance of the IIP figures as a policy determinant cannot be overstated, especially given that the RBI considers it as a key gauge of economic health while reviewing its monetary stance, all data will finally need to stand the scrutiny of consistency and credibility against the conditions prevailing on the ground.

Vocabulary

Reveal: make previously unknown or secret information known to others.

Example: Brenda was forced to reveal Robbie's whereabouts

Synonyms: divulge, disclose, tell, let slip, let drop, give away, give out

Resilience: the capacity to recover quickly from difficulties.

Example: The often remarkable resilience of so many British institutions

Contrast: differ strikingly.

Example: His friend's success contrasted with his own failure

Synonyms: differ from, be at variance with, be contrary to, conflict with

Robust: strong and healthy.

Example: The Caplans are a robust, healthy lot

Synonyms: strong, vigorous, sturdy, tough, powerful, solid, muscular

Caveat: a warning or proviso of specific stipulations, conditions, or limitations.

Example: It is also liberally sprinkled with caveats and warnings as to the difficulties in turning up more evidence.

Synonyms: warning, caution, admonition, proviso, condition, stipulation

Benign: not harmful in effect.

Example: In actual fact, for the vast majority of cases, the childhood infectious diseases are benign and self-limiting.

Synonyms: harmless, nonmalignant, noncancerous, benignant

Contemporary: belonging to or occurring in the present.

Example: The tension and complexities of our contemporary society

Synonyms: modern, up-to-date, up-to-the-minute, fashionable, modish

Appreciably: to an appreciable extent.

Example: Profits have grown appreciably over the last four years

Divergence: the process or state of diverging.

Example: The divergence between primates and other groups

Synonyms: separation, dividing, parting, forking, bifurcation

Scrutiny: critical observation or examination.

Example: Every aspect of local government was placed under scrutiny

Synonyms: examination, inspection, survey, study, perusal, investigation