Do the IIP data move along other coincident macro variables?

It has been widely reported by the Press that the IIP data are not very reliable and satisfactory. In order to have more confidence in the industrial statistics we need to look at other related macro-economic variables and draw more informed conclusion about the soundness of the IIP data. Coincident indicators should be juxtaposed with the industrial statistics to get a proper perspective on the matter. The selection of indicators for construction of coincident index was based on the survey of literature and growth cycle methodology. Overall, six indicators, viz., IIP–Electricity, Production of Commercial Motor Vehicles, Revenue on Railway Freight Traffic, Number of applicants on the live registers of employment exchange, Bank Credit to Commercial Sector, and Currency with the Public, were included for the analysis. The Composite Index of Coincident Indicator reveals a strong comovement with IIP–Manufacturing. Although sudden and sharp movements are observed in IIP–Manufacturing, in the recent period, these are well tracked by the composite index of coincident indicators.