Business, Economy & Banking Current Affairs

IIP output contracts 0.1% in June 2017

India’s factory output, measured by the Index of Industrial Production (IIP) has registered negative 0.1% growth in June 2017. It was mainly due to a fall in output of the manufacturing and capital goods sectors.

 According to data released by the Central Statistics Office (CSO) it is the first negative fall since June 2013. In June 2016, it had grown 8%.

Key Facts

  • Manufacturing sector: It contracted by 0.4% in June 2017.
  • Mining output: It rose by 0.4%.
  • Electricity generation: It increased by 2.1%.
  • Capital goods output: is a barometer of investment. It shrank by 6.8% in June 2017.
  • Consumer durables output: It contracted by 2.1%.
  • Consumer non-durables production: It rose by 4.9%.

About Index of Industrial Production (IIP)

The IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to chosen base period. It is compiled and published monthly by the Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation.

Base year: The CSO had revised the base year of the IIP from 2004-05 to 2011-12 in May 2017 to capture structural changes in the economy and improves the quality and representativeness of the indices. The revised IIP (2011-12) reflects the changes in the industrial sector and also aligns it with the base year of other macroeconomic indicators like the Wholesale Price Index (WPI) and Gross Domestic Product (GDP).

Sector wise items and weightages: It covers 407 item groups. Sector wise, the items included falls into 3 categories viz. Manufacturing (405 items), Mining (1 items) & Electricity (1 item). The weights of the three sectors are 77.63%, 14.37%, 7.9% respectively. The revised eight core Industries have a combined weightage of 40.27% in the IIP. Decreasing order of weightage of core industries is Electricity> Steel> Refinery Products> Crude> Coal> Cement> Natural Gas> Fertilizers.


MCX gets SEBI approval to launch India’s first gold options contract

Commodity derivatives bourse Multi Commodity Exchange Ltd (MCX) has received markets regulator Securities and Exchange Board of India’s (SEBI) approval to launch India’s first gold options contract.

The gold futures contract will have bi-monthly duration. The option will also have the existing gold kilo futures contract as its underlier.

Key Facts

The launch of gold options is one of the major reforms SEBI has taken for the commodity derivatives market.  Earlier in June 2017, SEBI had allowed options trading in commodities to deepen the market but permitted each exchange to launch options on futures of only one commodity initially.

SEBI is going to put strict eligibility criteria and options could be launched on futures contract of only those commodities that are among the top five in terms of total trading turnover value of previous 12 months. It also has stipulated necessary guidelines with regard to the product design and risk management framework to be adopted for trading in options on commodity futures.

About Multi Commodity Exchange Ltd (MCX)

The MCX is the country’s largest metals and energy commodity bourse. It is country’s first listed commodity futures exchange that facilitates online trading, and clearing and settlement of commodity futures transactions, thereby providing a platform for risk management.

It began functioning in November 2003 and operates within the regulatory framework of the Forward Contracts Regulation Act, 1952 (FCRA, 1952). It offers futures trading in bullion, ferrous and non-ferrous metals, energy, and a number of agricultural commodities (mentha oil, cardamom, potatoes, palm oil and others). Globally, MCX ranks no. 1 in silver, no. 2 in natural gas, no. 3 in crude oil and gold in futures trading.