Industrial production Current Affairs - 2019
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The Ministry of Statistics and Programme Implementation has released the First Revised Estimates of National Income, Consumption Expenditure, Saving and Capital Formation, 2017-18. The highlights of the revised estimates are:
- The forecast for GDP growth for 2017-18 was increased to 7.2% from the earlier estimate of 6.7%.
- The actual growth rate in 2016-17 has been increased to 8.2% from the 7.1% estimated earlier.
The Ministry of Statistics and Programme Implementation clarifies that the revision of the estimates for 2015-16 and 2016-17 are on the account of the availability of the latest data on agricultural production, industrial production, government expenditure (replacing the Revised Estimates with Actual for 2016-17) and also more comprehensive data available from various source agencies like the MCA and the NABARD and State/Union Territory Directorates of Economics and Statistics.
Criticisms against the Revision
The Economists criticise the revision because of the following reasons:
- The numbers do not match up to the ground realities.
- The data corresponding to the demonetisation year of 2016-17 shows strong growth in sectors that were widely agreed to have been badly hit by the exercise.
- The main factor for the revision was the increase in private final consumption expenditure which was increased by 1 percentage point. This was inconsistent with the idea of people having less cash to make purchases.
- The other main driver of the upward revision was the construction sector which was revised upwards by 4.7 percentage points. The earlier analyses had indicated that construction which has a large informal sector component was adversely affected similar to other informal sectors due to demonetisation.
- Other drivers for the upward revision in 2017-18, mining and quarrying sector and the public administration sector had data that is compiled by the government itself. Hence they should not have undergone such a vast revision. .
With 2019 being a election year, critics also cry foul play on part of the government to project a happy picture before the general elections.
Tags: agricultural production • government expenditure • Industrial production • mining and quarrying sector • Ministry of Statistics and Programme Implementation • NABARD • public administration sector • Revised Estimates
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%.