What is Index of Industrial Production (IIP)?
- The Index of Industrial Production (IIP) measures the short-term changes in the volume of production of industrial sectors in an economy.
- It indicates the growth or contraction of industrial activity over a period of time.
Base Year of IIP
- Current Base Year: 2011–12
- Base year is revised periodically to reflect structural changes in the economy.
Components of IIP
The IIP is divided into three major sectors:
1. Manufacturing Sector
- Weight: ~77.6%
- Largest contributor to IIP
2. Mining Sector
- Weight: ~14.4%
3. Electricity Sector
- Weight: ~8%
Manufacturing dominates, so its performance heavily influences IIP.
Who Releases IIP?
- Released by: National Statistical Office (NSO)
- Under: Ministry of Statistics and Programme Implementation (MoSPI)
- Frequency: Monthly
- Time lag: Usually released 6 weeks after the reference month
How is IIP Calculated?
IIP is calculated using the Laspeyres Index formula, which compares current production with base year production.
- Uses fixed weights (based on base year)
- Tracks volume, not value
- Based on physical output data
The Core Industries & IIP
Within the IIP, there are eight “core” industries that represent approximately 40.27% of the total weight. They are considered high-frequency indicators of infrastructure and industrial performance
- Refinery Products (highest weightage).
- Electricity, Steel, Coal, Crude Oil, Natural Gas, Cement, and Fertilisers.
