Index of Industrial Production

Q. Why is this in News?

A. Recently, as per official estimates for the Index of Industrial Production (IIP), India's industrial recovery slowed sharply in December 2021, with output growing just 0.4% year-on-year, and manufacturing activity contracting 0.1%.

• Contrary to expected growth of 2.5%, growth has come in at 0.4% which is disappointing.

Q. What is the Index of Industrial Production?

A.

• IIP is an indicator that measures the changes in the volume of production of industrial products during a given period.
• It is compiled and published monthly by the 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, namely, Mining, Manufacturing, and Electricity.
  • Use-based sectors, namely Basic Goods, Capital Goods, and Intermediate Goods.
• Base Year for IIP is 2011-2012.

Q. What is the Significance of IIP?

A. 

• 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.

Q. What are the Eight Core Sectors?

A.

• These comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
• The eight core sector industries in decreasing order of their weightage: Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilizers.