Reclassing India's new-age economy

An overhaul of the National Industrial Classification framework seeks to include new activities that better capture India's changing economy. The data is expected to help economic policymaking

- SHIVA RAJORA

Earlier this month, the Ministry of Statistics and Programme Implementation (Mospi) put out a note inviting feedback from stakeholders on the draft National Industrial Classification (NIC) framework.

Being revised for the first time since 2008, it aims to capture structural and technological changes in the Indian economy, including new industries and services that need inclusion and representation in official statistics.

The last time there was such a long hiatus in revising the NIC was between 1970 and 1987. In recent years, the pace of socioeconomic change has quickened and enterprises across sectors have undergone broad shifts. As a result, the revision exercise now underway is of a far greater magnitude than previous ones.

The first such classification of economic activity in the country came in 1962, with updates and revisions in 1970, 1987, 1998, 2004, and 2008.

The importance of NIC

The NIC is basically a set of several fivedigit codes - a standardised numerical system developed by the Mospi - to classify and categorise various economic sectors, whose output is then added to arrive at the country's gross domestic product (GDP). It also serves as a foundational tool for organising data related to industries and businesses. For example, in agriculture, forestry and fishing, code 01116 pertains to growing groundnut seeds for producing groundnut oil, while 01117 is for sunflower seeds, also for making oil.

These codes are also instrumental in capturing economic activity through statistical surveys such as the Annual Survey of Industries, informal sector surveys, the Economic Census, and the Ministry of Corporate Affairs (MCA) database. They further support economic research, registration processes, and policy formulation by both central and state government agencies, as well as private sector stakeholders.

What's the process?