According to MoSPI data, India’s Index of Industrial Production (IIP) rose by 5.7% in February, up from 3.8% in January.
What is the Index of Industrial Production (IIP)?
- IIP, as it is often known, is an index that measures overall manufacturing activity in various sectors of an economy.
- It is currently estimated with 2011-2012 as the baseline year.
- Every month, the Central Statistical Organisation (CSO) compiles and publishes the data.
- The Ministry of Statistics and Programme Implementation (MoSPI) oversees CSO operations.
Components of IIP:
- IIP comprises three major sectors: manufacturing (77.6%), mining (14.4%), and electricity (8%).
- Electricity, crude oil, coal, cement, steel, refinery products, natural gas, and fertilisers are the eight major industries that account for approximately 40% of the weight of items included in the IIP.
Basket of Products:
There are six subcategories.
- Primary goods (include mining, energy, fuels, and fertilisers)
- Capital goods (such as mechanical items)
- Intermediate goods include yarns, chemicals, semi-finished steel objects, and so on.
- Infrastructure goods include paints, cement, wires, bricks and tiles, train supplies, and so on.
- Consumer Durables (e.g., clothing, telephones, passenger automobiles, etc.)
- Consumer non-durables (e.g., food, pharmaceuticals, toiletries, and so on)
Who utilises IIP data?
- Various government departments, including the Ministry of Finance and the Reserve Bank of India (RBI), as well as commercial enterprises and analysts, use factory production statistics (IIP) for analysis.
- The data is also used to calculate the manufacturing sector’s Gross Value Added (GVA) in the Gross Domestic Product (GDP) on a quarterly basis.
IIP base year changes:
- In 2017, the base year changed from 2004-05 to 2011-12.
- Earlier base years included 1937, 1946, 1951, 1956, 1960, 1970, 1980-81, 1993-94, and 2004-05.
How does IIP differ from ICI?
- The National Statistics Office (NSO), Ministry of Statistics and Programme Implementation, compiles and publishes IIP monthly, six weeks following the end of the reference month.
- However, the Office of the Economic Adviser (OEA), the Department of Industrial Policy and Promotion (DIPP), and the Ministry of Commerce and Industry prepare and release ICI.
- The Eight Core Industries account for about 40.27% of the weight of products included in the Index of Industrial Production (IIP). These include electricity, steel, refined products, crude oil, coal, cement, natural gas, and fertilisers.
Source: https://m.economictimes.com/news/economy/indicators/industrial-production-rises-to-a-four-month-high-of-5-7-in-feb-compared-to-4-2-in-previous-month/articleshow/109250310.cms