7.2.1 In India, a wide variety of industrial classifications, including services, have been used by various organisations entrusted with the task of collection of statistical data in various censuses, surveys, etc. The need to evolve a common industrial classification for the use by different agencies was felt to be extremely important. Accordingly, the CSO took up the task of evolving an industrial classification as early as 1960 and evolved a Standard Industrial Classification (SIC) in 1962.
7.2.2 To incorporate the significant changes in the organisation and structure of industries taking place over a period of time, the necessity to periodically revise the industrial classification has often been felt. With this objective, the CSO revised SIC 1962 in 1970 and accordingly brought out the National Industrial Classification (NIC-70). This was subsequently revised in 1987 (NIC-87), which was further revised in 1998 (NIC-98).
7.2.3 All the industrial classifications developed by the CSO broadly accepted the major features of the International Standard Industrial Classifications (ISIC), with further extension of codes at the ultimate digit level. This was done to give due recognition to the special features of the Indian economy and also to meet the emerging requirements of user organisations.
7.2.4 The NIC-98, which followed the principles of the ISIC-1990 (Revision 3), is a classification of all economic activities, including services, undertaken by the economic units. The NIC-98 codes extend up to the 5-digit level. Total number of such 5-digit codes in NIC-98 is 1021 (see Annexe 7.1 for details).
7.2.5 The NIC classification of the CSO has found wide use in the country. These classifications are used by various divisions of the MoS&PI for carrying out Economic Censuses and sample surveys, for releasing national accounts statistics as well as for other purposes. Further, other important organisations outside the Ministry, like the offices of the Registrar General and Census Commissioner, India and the Development Commissioner, Small Scale Industries have also found significant use of the NIC classification. The adoption of the NIC by the important organisations mentioned above gives ample scope for cross-examining alternative data sets by industrial categories as available from different sources.
Deficiencies
7.2.6As stated already, NIC-98 is based on the ISIC (Revision 3), which was brought out a decade ago. But newer and newer types of services are coming into existences that have a parallel in other countries. Clearly, there is an urgent need to have an inventory of the emerging service areas and have a detailed classification of these. It may be desirable to have a classification of services in India such that it is comparable with other countries. In this context, the World Trade Organisation’s (WTO’s) List of Services (see Annexe 7.2) sheds important light on the various service areas that have been recognised. While it is likely that the importance of many service areas may differ from country to country, it will be noticed from this List that none of the areas seem irrelevant for the Indian context. It is possible that the level of operation of some of these services may be very low at present in the Indian context, but with progressive development they will tend to change. With increasing communications and free flow of information, it is very likely that services, which seem unimportant today, could acquire significance in the near future. At any rate, the objective to study the WTO’s list is to merely provide an indicative list of services. In the WTO’s List of Services presented in Annexe 7.2, an indication is given as to whether the various services listed are provided with specific Codes in the NIC-98 or not. A comparison of the two lists reveals the following:
Number of sub-categories or activities in the WTO’s list – 155;
Those listed as ‘others’ in the WTO’s list – 17;
Remaining sub-categories with proper description of activities – 138.
Out of (c):
Number of activities not listed in the NIC – 35;
Number of activities that are clubbed with other activities in the NIC –25;
Number of activities where the NIC either gives specific codes to the activities or splits the activity in the WTO’s list into more than one activities – 78.
Conclusions and Recommendations
7.2.7 It may be seen that there are cases where NIC-98 gives a more elaborate classification than the WTO list. But in many cases, NIC-98 has scope for further detailing. Thus there is a need for developing a proper Classification of Services. For the purpose of developing the suggested Classification, it is necessary to identify first the variety of services already in existence in India by considering all available sources. The task would involve identification of new activities by:
Looking at the international documents, websites and list of service providers that have made their appearance in the plethora of Yellow Pages of numerous cities and towns across India or in telephone directories;
Interacting with various agencies or associations that will be in a position to throw light on emerging areas or new activities; and
Examining alternative data sets like those of Follow-up Enterprise Surveys, Annual Survey of Industries as well as production data available from other sources.
7.2.8 Once the new but important activities are identified, the next task would be to classify them appropriately for meeting the requirements of the users. It may be mentioned that at the international level, including WTO, UN systems, IMF and World Bank, an effort is being initiated for properly coding commercial trading in Services, which has been already classified into 12 categories and 155 sub-categories in the WTO’s list.
7.2.9 It may also be mentioned that ISIC (Revision 3) took place during the year 1990. But the National Industrial Classification (NIC-98) was developed in 1998, i.e. after a gap of eight years. For maintaining international comparability, there is a need to reduce such gaps in future. In other words, when the next revision of the ISIC takes place, the CSO may immediately consider revising the existing National Industrial Classification. Of course, in the event of no such revision taking place at the international level in near future in the industrial classification, India has yet a case for revising the NIC-98 by properly classifying all important activities that have already assumed significance in the country’s economy, or are likely to do so in near future.
7.2.10 The Commission accordingly recommends that:
The work of identification and the preparation of a list of new activities in the Services Sector that are coming into existence should be carried out on a regular basis.
All such activities should be assigned proper codes within the framework of NIC and International Classification, periodically by the CSO for the benefit of user organisations with a view to maintaining international comparability.
The suggested list of new activities with their codes should be released through the website as well as other media.
Of these new activities, those, which are important at the international level, should be taken up with the organisations like WTO, IMF, etc. for their proper representation in the international classification.
Periodic revision of NIC should be attempted within a reasonable time frame after revision of the classification takes place in the international scenario.
