Govt Rebases Quantum Indices of Large Scale Manufacturing Industries

The government has rebased the Quantum Index of Large Scale Manufacturing Industries (QIM) from 2005-06 to 2015-16. The rebased QIM has been computed for the years 2016-17 to 2020-21 with 123 items having a total weight of 78.4 percent.

According to details, the Pakistan Bureau of Statistics (PBS) has released a report on the rebasing of QIM from 2005-06 to 2015-16. PBS states that the weights presently used for the QIM were derived from the Census of Manufacturing Industries (CMI) 2005-2006.

A total of 112 items with a cumulative weight of 70.3 percent are being used for the computation of QIM.

The items included in the rebased QIM are bakery products and chocolate & sugar confectionery, rice milling, mineral waters, preserved milk, towels, garments, corrugated paper/ paperboard containers, pesticides, insulated wire & cable, parts & accessories for motor vehicles, furniture and footballs.

The production data is collected from Oil Companies Advisory Council (OCAC), Ministry of Industries & Production and Provincial Bureaus of Statistics. Moreover, to keep QIM more reliable and to overcome the challenges, the current QIM is rebased on the basis of the results of CMI [Census of Manufacturing Industries] 2015-16.

PBS has further stated that new weights have been derived at two stages. First, the weights at the industry level have been derived on the basis of gross value added (GVA) of Large Scale Manufacturing Industries (LSMI) at the basic prices. The total GVA for the LSMI is taken as 100 and the percentage contribution of each industry has been considered as the weight of that industry.

Second, the weights have been derived at product level on the following lines: a) In case, there was only one item to be selected from manufacturing activity, the total weight of that activity has been assigned to the selected item. b) If more than one item has been selected from the manufacturing activity, the weights of the activity have been distributed among the selected items according to the relative production value of the selected items in that activity.

It is worth mentioning that PBS is mandated to collect, compile and disseminate reliable and timely data on socio-economic indicators of the country. Manufacturing, one of the main components of the industrial sector, bears significant importance as it contributed 13.4 percent to the GDP during the financial year 2015-16. The Large Scale Manufacturing (LSM) sector, being a major contributor in the manufacturing sector, plays a vital role in the national economy which contributes 10.7 percent to the GDP.

CMI is conducted with an aim to measure the structural changes in LSM industries and provides data on fixed assets, inventories, employment and employment cost, industrial taxes and census & gross value added etc. It also provides weights for the Quantum Index of Manufacturing Industries which is used as a proxy indicator for LSM to measure growth on monthly basis.

QIM measures the changes in production over time on a monthly as well as a cumulative basis. The weights presently used for QIM were derived from the Census of Manufacturing Industries (CMI) 2005-2006.

The data collected from all the existing sources in addition to the data from PBS internal sources for wearing apparel, towel, furniture, and football has been used for the computation of new QIM.

Overall 112 items with a weight of 70.332 percent were included in QIM 2005-06 while it has been increased to 123 items and 78.37 percent in QIM 2015-16.

According to PSB, under the base year 2005-06, indices were 131.9 while the growth rate was 3.1 percent; and, in the base year 2015-16, indices were 100 but the growth rate is not mentioned.

In 2019-20, indices were 129.5 and the growth rate was negative 9.8 under the base year 2005-06, however, indices were 102.4 and the growth rate was negative 11.1 as of the base year 2015-16

In 2020-21, the base year 2005-06 indices were 148.7 and the growth rate was 14.9; and in the base year 2015-16, indices were 114.1 and the growth rate was 11.3.

The Census of Large-Scale Manufacturing Industries is conducted after every five years with manufacturing establishments classified under (10 to 33 division) Pakistan Standard Industrial Classification (PSIC-2010) based on UN-ISIC.Rev.4. However, currently, it is linked with rebasing of National Accounts after 10 years.

To improve coverage, a Business Register of PBS was utilized for the current census, which is based on different administrative sources like Securities and Exchange Commission of Pakistan, Federal Board of Revenue, Employees Old-age Benefit Institution, Pakistan Stock Exchange, Distribution Companies of WAPDA, and provincial labor and industries departments etc. As a result, the number of establishments covered under the current census is approximately 390 percent higher than CMI 2005-06.

In the CMI-2015-16, the total frame of LSMI stands at 42578. PBS got a quality response of 23712 establishments during the conduct of CMI while the remaining 11473 establishments consisted of non-responded, poor quality response and 7393 bricks establishments in Punjab, were imputed for raising to complete frame.

The CMI-2015-16 shows the value of production/total output at producer prices Rs. 11,181 billion depicting an increase of 244.76 percent over Rs. 3,243 billion in CMI 2005-06. The values of production at producers’ prices have been recorded at national and provincial levels in five CMIs. These values include all indirect taxes (net of subsidies) except general sales tax.

The value of production (inclusive of sales tax) minus industrial cost gives Census Value Added (CVA) at market prices, which is Rs. 4,367 billion in 2015-16 as compared to Rs. 1350 billion in 2005-06 showing an increase of 223.47 percent.

The addition of non-industrial receipts less non-industrial payments into CVA results in the value added as measured by National Accounts and termed as a contribution to GDP (also termed as Gross Value Added). The CMI 2015-16 witnessed an increase of 203.8 percent contribution to GDP at producers’ prices (exclusive of sales tax) at Rs. 3,095 billion as compared to the CMI 2005-06 with Rs. 1018 billion.

The contribution to GDP at basic prices is obtained by deducting import/excise duties and other taxes net of subsidies on products from contribution to GDP at producers’ prices. The CMI 2015-16 depicts an increase of 211.05 percent in the contribution to GDP at basic prices at Rs. 2946 billion as compared to previous Census 2005-06 at Rs. 947 billion.

The capital stock or value of fixed assets at the end of the fiscal year 2015-16 has been calculated, adding the value of fixed assets at the beginning of the fiscal year and investment during the fiscal year 2015-16 (purchases less sales of fixed assets plus additions to fixed assets out of own production). It amounted to Rs. 3,916 billion at the end of the fiscal year 2015-16 as compared to Rs. 1,147 billion at the end of the fiscal year 2005-06, showing a 241.33 percent increase.

The total number of establishments as per the CMI 2015-16 frame is 42,578 and the total employed persons in these establishments are 2,340,966. The total contribution to GDP at basic prices stands at Rs 2,946 billion. A total of 23712 establishments were covered in the CMI 2015-16 while 18,866 establishments either did not respond or could not qualify to be included in the CMI 2015-16 due to low data quality. The raising frame included 14425 units in Punjab, 3782 in Sindh, 473 units in Khyber Pakhtunkhwa, 123 in Balochistan and 63 units in Islamabad.

The raising methodology is based on employment, GVA per employee at a five-digit level of activity under PSIC-2010. The overall employment of 2,340,966 was observed in the frame comprising 42,578 industrial units. The ratios of GDP per employee were computed for 23,712 reported establishments in CMI 2015-2016 at a five-digit level activity under each province. These ratios at a five-digit level were used to raise the defaulting non-response units in CMI 2015-16 in order to work out their contribution to GDP at basic prices at each province. After summing up the result of each province, the large-scale manufacturing sector contribution to GDP (BP) stands at Rs. 2946 billion during 2015-16.

Published by
ProPK Staff