April IIP sizzles, hits 8 month high of 7.1% led by power, mining

April IIP sizzles, hits 8 month high of 7.1% led by power, mining

India’s industrial growth, as per the Index of Industrial Production (IIP), quickened to 7.1 percent in April from 2.2 percent in March, data released on June 10 by the Ministry of Statistics and Programme Implementation showed.

At 7.1 percent, the April industrial growth rate is the highest in eight months, although it has been aided by a favourable base effect.

Base Effect

• The base effect refers to the impact of the rise in price level (i.e. last year’s inflation) in the previous year over the corresponding rise in price levels in the current year (i.e., current inflation)
• If the price index had risen at a high rate in the corresponding period of the previous year leading to a high inflation rate, some of the potential rise is already factored in, therefore a similar absolute increase in the Price index in the current year will lead to a relatively lower inflation rates.