INDEX OF INDUSTRIAL PRODUCTION

Subject: Economy

Context: IIP shrinks 3.6% in February owing to steep decline in manufacturing.

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.

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.