INDEX OF INDUSTRIAL PRODUCTION

Subject: Economics

Context: India’s eight core industry sectors shrank just 0.8% in September on a year-on-year basis, recording their lowest contraction since March 2020.

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: 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.