India’s factory output, measured by the Index of Industrial Production (IIP) rose to 8.4% in November 2017 from 2% in October 2017. It was due to robust performance by manufacturing and capital goods sectors.
According to data released by the Central Statistics Office (CSO), it was highest growth registered by IIP in 17-months. The previous high was recorded at 8.9% in June, 2016.
IIP Growth in November 2017
- Manufacturing sector: Recorded an impressive growth of 10.2%.
- Mining output: Recorded 1.1% growth.
- Electricity generation: Recorded 3.9%..
- Capital goods output: It is a barometer of investment. It grew by 9.4%.
- Consumer durables output: It grew just by 2.5%. It reflected weakness in urban demand.
- Consumer non-durables production: Recorded growth of 23.1%.
Index of Industrial Production (IIP)
The IIP is composite indicator that measures short-term changes in 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.
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 (base year 2011-12) is Petroleum Refinery production (weight: 28.04%), Electricity generation (19.85%), Steel production (17.92 %), Coal production (10.33 %), Crude Oil production (8.98 %), Natural Gas production (6.88 %), Steel production (17.92 %) and Fertilizer production (2.63 %).
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).