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IIP Growth Slowed to 0.4% in December

Context:

India’s industrial recovery slowed sharply in December, with output growing just 0.4% year-on-year, and manufacturing activity contracting 0.1%, as per official estimates for the Index of Industrial Production (IIP). Electricity output grew 2.8%, while mining activity rose 2.6%.

  • Data shows capital goods, consumer durables output shrank signalling poor investment, consumption
Relevance:

GS-III: Indian Economy (Growth and Development of Indian Economy, Inflation)

Dimensions of the Article:
  1. What is Index of Industrial Production (IIP)?
  2. About Index of Eight Core Industries:
  3. Significance of IIP:

What is 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 National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.
  • Base Year for IIP is 2011-2012.
  • 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

About Index of Eight Core Industries:

  • The Eight Core Industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).

Released by: The Office of the Economic Adviser, Department for Promotion of Industry and Internal Trade

Base year: 2011-12

Below image attached Eight Core Industries based on their weightage.
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

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