INDEX OF INDUSTRIAL PRODUCTION & CPI

INDEX OF INDUSTRIAL PRODUCTION & CPI

Subject : Economy

Context : The retail inflation, measured Consumer Price Index (CPI) eased to 4.29 per cent in April. Separately, the factory output, measured in terms of Index of Industrial Production (IIP), grew by 22.4 per cent in March.

Concept :

Index of Industrial Production

• The Index of Industrial Production (IIP) is an index that shows the growth rates in different industry groups of the economy in a fixed period of time.
• It is compiled and published monthly by the Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation.
• IIP is a composite indicator that measures the growth rate of industry groups classified under:
• Broad sectors, namely, Mining, Manufacturing, and Electricity.
• Use-based sectors, namely Basic Goods, Capital Goods, and Intermediate Goods.
• Base Year for IIP is 2011-2012.
• The eight core industries of India represent about 40% of the weight of items that are included in the IIP.

Consumer Price Index   

• Consumer Price Index or CPI is the measure of changes in the price level of a basket of consumer goods and services bought by households. CPI is a numerical estimation calculated using the rates of a sample of representative objects the prices of which are gathered periodically.
• The CPI captures changes in price level at the consumer level.
• Changes in prices at the producer level are tracked by the Wholesale Price Index (WPI).
• CPI can capture the change in the prices of services which the WPI cannot.

Various Indices of CPI are :

• CPI – Industrial Workers (CPI -IW): It tries to measure the alterations over a time period on the prices of a fixed basket of goods and services utilised by Industrial Workers.
• CPI – Agricultural Labourers (CPI -AL): This index measures the change in the price of commodity basket consumed by the agricultural labourers. It is this used to revise minimum wages for agricultural labour in different States.
• CPI – Rural Labourers: This index measures the change in the price of commodity basket consumed by the rural labourers.
• The above indices are published monthly by Labour Bureau under the Ministry of Labour and Employment for all India as well as States and Union Territories.
• Since the above three indices covered only a segment of the population and not the overall nation, we Designed three more indices of CPI.
• CPI – Rural: This index measures the change in the price of commodity basket consumed by the rural population
• CPI – Urban: This index measures the change in the price of commodity basket consumed by urban population
• CPI – Combined: It is computed by combining CPI Rural and CPI Urban Index The base year for the above three indices is 2011-12 and are published monthly by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.