All that you need to know about IIP


The IIP is a short-term indicator of industrial growth till more detailed studies or surveys are available. This indicator is important to the government for policy planning purposes

The index of industrial production (IIP) is an index which measures the growth of various sectors in an economy. The IIP is an abstract number, the magnitude of which represents the status of production in the industrial sector for a given period of time compared to a reference period of time. IIP compares the growth in the general level of industrial activity in the economy with reference to a comparable base year. 

As it is difficult to get the accurate data of all the sectors, IIP basically covers three sectors mining, manufacturing and electricity.

How has the IIP evolved with time?

The IIP was first compiled and released using 1937 as the base year and included 15 industries. Subsequently, it has been updated at least seven times, both with regard to the base year and the nature of items included, to keep the data relevant.

To track structural changes in the industrial sector, the base year of the all-India IIP—started in 1937—was revised in 1946, 1951, 1956, 1960, 1970, 1980-81 and 1993-94. As the structure of industrial sector changes over time, it becomes necessary to revise the base year of IIP periodically so as to measure realistically, the growth in the industrial sector. 

The current IIP data, with a base year of 2004-05, for the month of July 2012 stands at 181.8. The IIP stood at 181.8 in January 2013. The cumulative growth for the April-January 2012-13 period over the year-ago period was 1%.

Why IIP is important?

The IIP is a short-term indicator of industrial growth till more detailed studies or surveys are available. This indicator is important to the government for policy planning purposes. The IIP is also being extensively used by various organisations including industrial associations, research institutes and academicians.  

How and when is it computed?

The IIP figures are compiled and published monthly by the Central Statistics Office (CSO). The IIP estimate for a given month is always released within six weeks from that month. The data for the IIP estimate is supplied by 15 source agencies which include Department of Industrial Policy and Promotion, Indian Bureau of Mines, CSO and Central Electricity Authority, among others.

Why are IIP figures in the news?

The weak IIP figures display weak economic activity due to government policy paralysis and a slowdown in corporate capital expenditure. The poor IIP figures are very disappointing as it bodes ill for GDP (gross domestic product) growth in the current quarter. 



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