INDEX OF INDUSTRIAL PRODUCTION (IIP) (Syllabus: GS Paper 3– Economy)

Context: Recently, industrial growth reached a five-month peak in July, and in August, consumer inflation decreased to below 7%, providing the Reserve Bank of India (RBI) with important economic indicators to consider.

• According to data, the Index of Industrial Production (IIP) also increased from preceding month and also compared to last year, suggesting the back of a recovery in manufacturing ahead of the festive season.

Index of Industrial Production (IIP)

• IIP is an indicator that measures the changes in the volume of production of industrial products during a given period.
• Published by: National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.
• It 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: 2011-2012.
• Significance of IIP: 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 (Gross Domestic Product) estimates.

Eight Core Sectors

• These comprise 40.30% of the weight of items included in the Index of Industrial Production (IIP).
• The eight core sector industries: Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilizers.