How to work with index numbers? I have Index numbers of Infrastructure industry. The base year for the first ten years i.e is 1993-94 = 100 and for the next ten years is 2004-05 = 100
My question is - How to work with index numbers as the flow of data changes with the base year. Is there any way to keep the flow intact?
 A: What does an index measure?
Quite simply, it measures the change relative to some base year. For example:
Year Index   Change (per Year)    Change (to base year)
 1    100                           
 2    150        +50%                 +50%
 3     80        -46.67%              -20%
 4    100        +25%                   0%

Rebasing an index
Rebasing means that you change the base year. Let's say we want year 3 as our base year (3 = 100). We can do this by diving each year by the value of our new base year (80) and multiplying the result by 100.
Year Index   Change (per Year)    Change (to base year)
 1    125                               +25%
 2    187.5        +50%                 +87.5%
 3    100          -46.67%               0%
 4    125          +25%                 +25%

Chaining an index
That's what your looking for. Chaining means that you chain / combine two indicies with different base years. All you need is at least one overlapping year. Then you divide one by the other (depends which base year you want to keep) and multiply this factor with the data you want to include.
Example: We take our old index and get new data starting with year 3. We want to keep year 1 as our base year and use year 4 as our overlapping year.
Year Index(Base year 1)    Index(Base year 3)   
 1    100                     
 2    150       
 3     80                    100
 4    100                    125
 5                           150
 6                           200

The factor is 100/125 = 0.80 which we then multiply with each of the values of the new index (base year 3).
Year Index(Base year 1)    Index(Base year 3)    Complete Index (Base year 1)         
 1    100                                             100                  
 2    150                                             150
 3     80                    100 * 0.8 = 80            80
 4    100                    125 * 0.8 = 100          100
 5                           150 * 0.8 = 120          120
 6                           200 * 0.8 = 160          160

And that's it.
