💡 IIP 💡
• The Index of IIP (Industrial Production) is an index that indicates the performance of various industrial sectors of the Indian economy
• It is calculated and published by the CSO (Central Statistical Organisation) every month
• It is a composite indicator of the general level of industrial activity in the economy
EXPLANATION
• This index gives the growth rates of different industry groups of the economy over a specified time period
• The industry groups that it measures are classified under the following:
• Broad sectors like manufacturing, mining, and electricity
• Use-based sectors like capital goods, basic goods, intermediate goods, infrastructure goods, consumer durables, and consumer non-durables
• The eight core industries of India represent about 40% of the weight of items that are included in the IIP. The Eight Core Sectors/Industries are:
• Electricity
• Steel
• Refinery products
• Crude oil
• Coal
• Cement
• Natural gas
• Fertilizers
• The United Nations Statistics Division (UNSD) recommends including quarrying, gas steam, and air-conditioning supply, sewerage, water supply, waste management, and remediation in the broad sectors. But this is not done due to the problems in data availability on a monthly basis for all these sectors. So, the data has been restricted to mining, electricity, and manufacturing
IMPORTANCE
• The Index is used by government agencies and departments such as the Finance Ministry and the RBI for policymaking
• It is also used for estimating the Gross Value Added of the manufacturing sector quarterly
• Also, the Index is used by business analysts, financial experts, and the private industry for multiple purposes
• It is the only measure of the physical volume of production
• It is also extremely useful for the projection of advance GDP estimates