IIP Growth

According to data released by the Commerce Ministry, the output of Eight Core Industries increased year-on-year by 5. 8% in February 2022, representing a four month high growth.

Details –

• Production of eight infrastructure sectors expanded by 5.8% in February against a contraction of 3.3% in the same month last year on better show by coal, natural gas, refinery products and cement industries.
• Production of crude oil and fertiliser declined in February this year.
• The core sector industries had grown by 4% in January.
• The growth rate of the eight infrastructure sectors — coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity — stood at 11% during April-February this fiscal, as against a negative growth rate of 8.1% during the same period last fiscal.
• According to the data, production of coal rose by 6.6%, natural gas by 12.5%, refinery products by 8.8%, and cement by 5% in February.

About the Index of Eight Core Industries –

• The Index of Eight Core Industries is a monthly production index, which is also considered as a lead indicator of the monthly industrial performance.
• It is compiled based on the monthly production information received from the Source Agencies.
• The index is calculated by using the Laspeyre’s formula of weighted arithmetic mean of quantity relatives.
• The objective of the ICI is to provide an advance indication on production performance of industries of ‘core’ nature before the release of Index of Industrial Production (IIP) by Central Statistics Office.
• The Index is compiled and released by Office of the Economic Adviser (OEA), Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, Government of India, on last working day of every month at 5.00 P.M.

About the ‘Index of Industrial Production’ –

• Index of Industrial Production data or IIP as it is commonly called is an index that tracks manufacturing activity in different sectors of an economy.
• The IIP number measures the industrial production for the period under review, usually a month, as against the reference period.
• IIP is a key economic indicator of the manufacturing sector of the economy.
• There is a lag of six weeks in the publication of the IIP index data after the reference month ends.
• IIP index is currently calculated using 2011-2012 as the base year.
• It is compiled and published on a monthly basis by the Central Statistics Office (CSO) with a time lag of six weeks from the reference month.
• Components – Mining, manufacturing, and electricity are the three broad sectors in which IIP constituents fall. The relative weights of these three sectors are 77.6% (manufacturing), 14.4% (mining) and 8% (electricity). Electricity, crude oil, coal, cement, steel, refinery products, natural gas, and fertilisers are the eight core industries that comprise about 40 per cent of the weight of items included in the IIP.