The theoretical aim of the IIP is to capture the direction and the trend of industrial production in the country, not the absolute value of industrial production. The reason being that it was measuring industrial output using baskets of production items and producing entities that had remained unchanged since 2004-05. The index was constructed with the output figures received month over month from the baskets of items and entities fixed in the base year. But since the basket was frozen no new entity could be taken in place of the zero-output one. The revision, the ninth such exercise since the original base year choice of 1937, is aimed at capturing the changes that have taken place in the industrial sector since 2004-05.

Source: The Hindu May 16, 2017 18:34 UTC