Industrial production Current Affairs
According to data released by the Central Statistics Office (CSO), factory output measured in terms of the Index of Industrial Production (IIP) had grown 7.1% in February 2017. It was mainly driven by robust performance of manufacturing sector coupled with higher offtake of capital goods and consumer durables. The IIP recorded growth of 8.54% in November 2017, 7.1% in December 2017 and 7.4% in January 2018. During April-February period, IIP has slowed to 4.3% from 4.7% compared to same period 2017-18 fiscal.
Sector wise IIP projection
Index of Industrial Production (IIP)
The IIP is composite indicator that measures short-term changes in volume of production of basket of industrial products during given period with respect to chosen base period. It is compiled and published monthly by 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 economy and improves quality and representativeness of indices. The revised IIP (2011-12) reflects the changes in industrial sector and also aligns it with base year of other macroeconomic indicators like 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 combined weightage of eight core Industries in the IIP is 40.27%.
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.