Written by Talent KAS

Related Topics: Manufacturing Sector, Indian Economy


  • As per data released by the Statistics Ministry, the index of industrial production (IIP) grew 4.3% in July 2019 from a downward-revised 1.2% in June 2019.
  • Industrial activity rebounded to 4.3% on a broad-based recovery across key sectors such as mining, manufacturing and construction.

Performance across different sectors

  • Within the index, the mining sector accelerated to 4.92% in July compared with 1.53% in June 2019.
  • The manufacturing sector, similarly, saw growth quicken to 4.15% from 0.23% over the same period.
  • Construction and infrastructure sector saw a turnaround in July, growing 2.13% after contracting 1.9% in June 2019.
  • On the consumer side, the consumer durables sector reined in its contraction, contracting 2.7% in July compared with a steep contraction of 10.2% in June 2019.
  • Consumer non-durables saw growth accelerating to 8.29% from 7.08%.
  • The electricity sector, however, saw growth slowing in July to 4.75% from 8.19% in June 2019.

What is IIP?

  • IIP is a composite indicator measuring changes in the volume of production of a basket of industrial products over a period of time, with respect to a chosen base period.
  • It is compiled and published on a monthly basis by the CSO with a time lag of six weeks from the reference month.
  • The eight Core Industries comprise nearly 40.7 % of the weight of items included in IIP.
  • They are Coal, Crude oil, Natural gas, Refinery products, Fertilisers, Steel, Cement and Electricity.
  • Base year for IIP is 2011-2012.

Significance of the Index

  • IIP is the only measure on the physical volume of production.
  • The all-India IIP provides a single representative figure to measure the general level of industrial activity in the economy.
  • It is used by government agencies including the Ministry of Finance, the Reserve Bank of India etc, for policy purposes.
  • It forms a crucial input for compilation of Gross Value Added (GVA) of the manufacturing sector in the Gross Domestic Product (GDP) on a quarterly basis.
[Source: The Hindu]


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