IIP 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.

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Industrial production grows 5.7% in November 2016

India’s factory output, measured by the Index of Industrial Production (IIP) has registered 5.7% growth in November 2016 as against 1.9% in October 2016.

It is the fastest growth recorded in more than four years and is largely on account of a low base effect. It also does not display the negative effects of demonetisation as production cycles in manufacturing take longer to adjust to any demand change.

Key Facts
  • Manufacturing sector grew by 5.5% in November 2016.
  • Mining sector output rose 3.9%.
  • Electricity generation sector increased 8.9%.
  • Capital goods output surged 15%.
  • Consumer durable output jumped 9.8%
  • Consumer non-durable production increased 2.9%
  • Overall growth in consumer goods output was 5.6%.

About Index of Industrial Production (IIP)

The IIP is compiled and published every month by Central Statistics Office (CSO) of the Union Ministry of Statistics and Programme Implementation. It covers 682 items comprising Manufacturing (620 items), Mining (61 items) & Electricity (1 item). The weights of the three sectors are 75.53%, 14.16%, 10.32% respectively and are on the basis of their share of GDP at factor cost during 2004-05. The eight Core Industries comprise nearly 38 % of the weight of items included in IIP.

Base Effect: It is basically the consequence of abnormally high or low levels of inflation in a previous month distorting headline inflation numbers for the most recent month.

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