The Index of Industrial Production or IIP is an important indicator of growth but has been a nightmare for economists and often the target of jokes. Here’s why.

Take digestive enzymes for example — it has a weight of just 0.22 percent in the index. However, in the year 2015, the item showed over 1000 percent level of growth every month and despite having a weight of just 0.22 percent it moved the IIP by 1-2.5 percent in certain months.

In 2022, another item — rubber insulated cables — is also showing wild growth though it doesn't seem to have moved the IIP much. Questions arise on how year-on-year output can swing as much as 35-53 percent in the case of cables and 1000 percent in the case of digestive enzymes. Is the sample too small? Is the collection not regular?

To understand these knotty problems and possible solutions, CNBC-TV18’s Latha Venkatesh spoke to Gurucharan Manna, Senior Adviser, NCAER, and former DG at CSO; Sudipto Mundle, Chairman at CDS; and Pramit Bhattacharya, independent journalist.

Watch video for more

(Edited by : Shoma Bhattacharjee)