Industrial output rise moderates to 4.3 % – IIP

Subject : Economy

Section :National Income

Concept :

India’s industrial production growth slipped to 4.3 per cent in December from 7.3 per cent in November 2022, mainly due to subdued performance of the manufacturing sector, according to official data.
However, there was improvement on an annual basis as the factory output growth measured in terms of the Index of Industrial Production (IIP) stood at 1 per cent in December 2021.

Index of Industrial Production (IIP)

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 National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.
IIP is a composite indicator that measures the growth rate of industry groups classified under:
Broad sectors: Mining, Manufacturing, and Electricity.
Use-based sectors: Basic Goods, Capital Goods, and Intermediate Goods.
Base Year for IIP is 2011-2012.

About Eight Core Sectors:

These comprise 27% of the weight of items included in the Index of Industrial Production (IIP).
The eight core sector industries in decreasing order of their weightage: Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilizers.

Significance of IIP:

IIP is the only measure on the physical volume of production.
It is used by government agencies including the Ministry of Finance, the Reserve Bank of India, etc, for policy-making purposes.
IIP remains extremely relevant for the calculation of the quarterly and advance GDP estimates.