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.
- 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.