11 Jun April IIP sizzles, hits 8-month high of 7.1%
April IIP sizzles, hits 8-month high of 7.1% – Today Current Affairs
Factory output growth surprised in April hitting an eight-month high of 7.1 per cent up from 2.2 per cent in March.
The sharp increase in industrial growth comes after data released last month showed that the country’s eight core industries grew 8.4 per cent in April, up from the revised 4.9 per cent in March.
Today Current Affairs
What is ‘Index of Industrial Production’?
The Index of Industrial Production (IIP) is an index which shows the growth rates in different industry groups of the economy in a stipulated period of time. The IIP index is computed and published by the Central Statistical Organization (CSO) on a monthly basis.
IIP is a composite indicator that measures the growth rate of industry groups classified under,
1. Broad sectors, namely, Mining, Manufacturing and Electricity
2. Use-based sectors, namely Basic Goods, Capital Goods and Intermediate Goods.
Currently IIP figures are calculated considering 2011-12 as base year.
IIP calculates the data of eight core sectors namely;
1. Coal: Its total weightage is 10.33% in the core sectors
2. Crude: Its total weightage is 8.98% in the core sectors
3. Natural gas: Its total weightage is 6.88% in the core sectors
4. Refinery products: Its total weightage is 28.04% in the core sectors
5. Steel: Its total weightage is 17.92% in the core sectors
6. Cement: Its total weightage is 5.37% in the core sectors
7. Fertilizers: Its total weightage is 2.63% in the core sectors
8. Electricity: Its total weightage is 19.85% in the core sectors
The eight-core sectors comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
The IIP is compiled using data received from 16 sources agencies; The Hindu Analysis
1. Department of Industrial Policy and Promotion,
2. Indian Bureau of Mines
3. Central Electricity Authority
4. Joint Plant Committee
5. Ministry of Petroleum and Natural Gas
6. Office of Textile Commissioner
7. Department of Chemicals and Petrochemicals
8. Directorate of Sugar
9. Department of Fertilizers
10. Directorate of Vanaspati, Vegetable oils and Fats
11. Tea Board
12. Office of Jute Commissioner
13. Office of Coal Controller
14. Railway Board
15. Office of Salt Commissioner
16. Coffee Board
What is the meaning of base year in the Index of Industrial Production (IIP); The Hindu Analysis
1. The base year for IIP is always given a value of 100.
2. The base year of IIP has been revised to 2011-2012 (in the month of May)
3. This has been done in order to bring the IIP data at par with GDP data (GDP base year has been revised to 2011-2012).
What base year shows : The Hindu Analysis
Suppose the value of IIP in April 2022 is 135, this means that there has been a 35% (135-100) increase in the industrial activities in India as compared to the industrial activities in 2011-2012.
The Sectoral composition of the IIP is as follows : The Hindu Analysis
The new series of IIP has a total of 809 items occurring in the manufacturing sector in the item basket (405 item groups).
The Index of Industrial Production was bolstered by a sharp growth in manufacturing at 6.8 per cent, while mining and electricity output surged 7.8 per cent and 11.8 per cent, respectively, according to data released by the Statistics Ministry.
The following table giving the use-based classification; The Hindu Analysis
On use-based classification, both capital and primary goods did well in April recording growth rates of 14.7 per cent (2 per cent) and 10.1 per cent (5.7 per cent), respectively. While the consumer durables sector rose 8.5 per cent (-2.6 per cent), consumer non-durables grew a tepid 0.3 per cent (-4.6 per cent). The lackluster show on the non-durables sector is a reflection that consumers are wary of spending as inflation rages on.
The essence of the article is that the Index of Industrial Production (IIP) is like the thermometer of an economy. It shows the real picture of all the main sectors of the economy. If the performance of these 8 core sectors of the economy is good then the overall development of the country is inevitable.