Index of Industrial Production (IIP)
The Index of Industrial Production (IIP) reflects the growth of core industrial sectors in an economy. The IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period. It essentially takes a basket of industrial products and creates an index by assigning different weights to different products. Growth in industrial production is determined by comparing the monthly values of this index with the index value in the same month last year. This rate of growth (positive or negative) in IIP signals India’s industrial health or the lack of it.
The IIP is the weighted-average of 3 indexes - Mining (14.4%), Manufacturing (77.6%) and Electricity (8%). In addition, the IIP also constitutes 6 use-based weighted-average indexes - Primary Goods (34%), Capital Goods (8.2%), Intermediate Goods (17.2%), Infrastructure/Construction Goods (12.3%), Consumer Durables (12.8%), Consumer Non-Durables (15.3%).
Eight core Industries (Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity) comprise 40.27% of the weight of the items included in IIP which is tracked through the Index of Infrastructure Output. Some sectors may outperform others due to a variety of reasons, such as growth prospects, position in the business cycle, government policy, international factors, etc.
IIP is a short-term measure of industrial growth till the outcomes from Annual Survey of Industries (ASI) and National Accounts Statistics such as GDP are available. It is compiled and published monthly by the National Statistical Office, Ministry of Statistics and Programme Implementation (MoSPI) six weeks after the reference month ends.
The Base Year for the IIP is 2011-12 with a value of 100. So if the index for mining in Mar'20 is say 132.7, it implies that compared to 2011-12 index value of 100, mining has performed at a growth rate of 32.7% in 8 years.
The Index of Industrial Production (IIP) reflects the growth of core industrial sectors in an economy. The IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period. It essentially takes a basket of industrial products and creates an index by assigning different weights to different products. Growth in industrial production is determined by comparing the monthly values of this index with the index value in the same month last year. This rate of growth (positive or negative) in IIP signals India’s industrial health or the lack of it.
The IIP is the weighted-average of 3 indexes - Mining (14.4%), Manufacturing (77.6%) and Electricity (8%). In addition, the IIP also constitutes 6 use-based weighted-average indexes - Primary Goods (34%), Capital Goods (8.2%), Intermediate Goods (17.2%), Infrastructure/Construction Goods (12.3%), Consumer Durables (12.8%), Consumer Non-Durables (15.3%).
Eight core Industries (Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity) comprise 40.27% of the weight of the items included in IIP which is tracked through the Index of Infrastructure Output. Some sectors may outperform others due to a variety of reasons, such as growth prospects, position in the business cycle, government policy, international factors, etc.
IIP is a short-term measure of industrial growth till the outcomes from Annual Survey of Industries (ASI) and National Accounts Statistics such as GDP are available. It is compiled and published monthly by the National Statistical Office, Ministry of Statistics and Programme Implementation (MoSPI) six weeks after the reference month ends.
The Base Year for the IIP is 2011-12 with a value of 100. So if the index for mining in Mar'20 is say 132.7, it implies that compared to 2011-12 index value of 100, mining has performed at a growth rate of 32.7% in 8 years.



SUBJECT Variables
SECTORAL
The IIP is the weighted-average of 3 indexes - manufacturing, mining and electricity. The relative weight of these in the Index are manufacturing (77.6%), mining (14.4%), and electricity (8%).
The sector composition is one of the ways to classify the products in IIP, under which a basket of products is grouped under manufacturing, mining and electricity - the other being a use-based classification.



- Industrial production, or the factory output, gauged by the Index of Industrial Production (IIP) comprising the three sectors of manufacturing, mining, and electricity improved by 1.1% in Mar'23, compared to the revised figure of 5.8% in Feb'23.
- The overall industrial output fell by 8.5% YoY in 2020-21 due to lower industrial activity from Covid-induced lockdowns. The output increased by 11.4% in 2021-22. This can be primarily attributed to a lower base effect as the comparison is with 2020-21 where the production shrunk by 8.5% due to the Covid outbreak. When compared with 2019-20, the annual production in 2021-22 increased only by 2%.
- Annual production grew by 5.1% YoY in 2022-23.



- Mining output recorded a 6.8% YoY growth in Mar'23, in comparison to an 4.8% growth in Feb'23.
- The mining output fell by 7.8% YoY in 2020-21 due to lower industrial activity from Covid-induced lockdowns. Annual mining production rose by 12.2% YoY in 2021-22. This can be primarily attributed to a lower base effect as the comparison is with 2020-21 where the production shrunk by 7.8% due to the Covid outbreak. When compared with 2019-20, the annual production in 2021-22 increased only by 3.4%.
- Annual mining output increased by 5.8% in 2022-23.



- The manufacturing sector, which comprises 77.6% of the index of industrial production, registered a growth of 0.5% in Mar'23. Within the manufacturing sector, the manufacture of recorded registered the sharpest growth of 23.3%, followed by the manufacture of beverages at 19.5%. The manufacture of computers and electronic products witnessed the biggest YoY decrease of 6.5% in Mar'23, followed by the manufacture of electrical equipment at 4.5%.
- Annual manufacturing production rose by 11.8% YoY in 2021-22. This can be primarily attributed to a lower base effect as the comparison is with 2020-21 where the production shrunk by 9.6% due to the Covid outbreak. When compared with 2019-20, the annual production in 2021-22 increased only by 1.1%.
- Annual manufacturing production rose by 4.5% in 2022-23



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