What is Index of Industrial Production(IIP)?
Industrial production in India has contracted, shows the IIP data-what it means for the economy
What is IIP?
- The IIP number measures the industrial production for the period under review, usually a month, as against the reference period.
- The IIP is an index used to track the performance of the industrial sector in the Indian economy. It does this by mapping the volume of production.
- It is a key economic indicator of the manufacturing sector of the economy.
- IIP index is currently calculated using 2011-2012 as the base year.
- The base year was changed to 2011-12 from 2004-05 in the year 2017.
- IIP Index Components:Electricity, crude oil, coal, cement, steel, refinery products, natural gas, and fertilisers are the eight core industries that comprise about 40 percent of the weight of items included in the Index of Industrial Production. Mining, manufacturing, and electricity are the three broad sectors in which IIP constituents fall.
Who releases Index of Industrial Production or IIP data?
- In the case of Index of Industrial Production India, the data is compiled and published by CSO every month. CSO or Central Statistical Organisation operates under the Ministry of Statistics and Programme Implementation (MoSPI).
- The IIP index data, once released, is also available on the PIB website.
- The data is sourced from various agencies in different ministries or departments of the government. The Department of Industrial Policy and Promotion (DIPP) is the source for the major chunk of data for the calculation.
Current Data and Economy:
- The December data shows a contraction by 0.3%.
- In December, while production of primary goods and intermediate goods has picked up, that of capital goods has contracted heavily. This shows there is little demand for new machinery
- In November, the Index had expanded by 1.8% after witnessing three consecutive months — August, September, and October — of contraction. A key reason for positive growth in November was the favourable base effect.