IIP Edged up 0.08% in April from same month in 2019

IIP Edged up 0.08% in April from same month in 2019

Subject : Economics

Context : India’s April industrial output edged up 0.08%, from the level recorded during the same month in 2019, index of industrial production (IIP) data released by the National Statistical Office on Friday showed.

Concept :

• The IIP data was not comparable with the year-earlier figures as ‘a majority of the establishments did not operate in April 2020’ as a result of the nationwide lockdown imposed to curb the spread of COVID-19 infections, the NSO observed.
• The manufacturing sector, hit hardest by last year’s national lockdown, posted a 0.9% decline when compared with April 2019. Economists said the IIP data needed to be seen in perspective, given the impact of the second wave.

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: Mining, Manufacturing, and Electricity.

Use-based sectors: 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.

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.