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EIGHT CORE INDUSTRIES’ OUTPUT CONTRACTS 23.4% IN MAY 2020


Focus: GS-III Indian Economy, Industry and Infrastructure

Why in news?

The output of eight core infrastructure industries shrank by 23.4% in May 2020 due to the COVID-19 Lockdown.

Details

  • Barring fertiliser, all seven sectors — coal, crude oil, natural gas, refinery products, steel, cement, and electricity — had recorded negative growth in May.
  • During April-May 2020-21, the sectors output dipped by 30% as compared to 4.5% in the same period previous year.
  • These eight industries accounts for 40.27% in the Index of Industrial Production (IIP).

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 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

The Eight Core industries of IIP are:

  1. Coal
  2. Crude Oil
  3. Natural Gas
  4. Refinery Products
  5. Fertilizers
  6. Steel
  7. Cement
  8. Electricity.
This image has an empty alt attribute; its file name is 8-Core-Industries-and-Weightage.jpg

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.

-Source: The Hindu, Hindustan Times


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