Index of Industrial Production (IIP) increases by 5.7% in February 2024

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.

  1. Primary goods (include mining, energy, fuels, and fertilisers)
  2. Capital goods (such as mechanical items)
  3. Intermediate goods include yarns, chemicals, semi-finished steel objects, and so on.
  4. Infrastructure goods include paints, cement, wires, bricks and tiles, train supplies, and so on.
  5. Consumer Durables (e.g., clothing, telephones, passenger automobiles, etc.)
  6. 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.

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