Index of Industrial Production Rises 10.3% in August

GS Paper III Indian Economy

Context:

India’s factory-output growth based on the Index of Industrial Production (IIP) rose to a 14-month high of 10.3% in August.

Electricity production: In August 2023 grew 15.3% year-on-year (y-o-y) and 8.1% sequentially, this rise could be attributed to deficient rainfall.
Manufacturing output: It was up 9.3% in August and sequentially the output of the sector rose by 1.2% indicating an uptick in manufacturing activity.
Mining Activity: It remained flat during August, even after growing 12.3% on year on account of the low base effect.
Use-Based Category: All the six sectors recorded y-o-y growth with infrastructure goods’ output growing at 14.9%, followed by capital goods at 12.6% and primary goods at 12.4%.

Index of Industrial Production (IIP) is an index that tracks manufacturing activity in different sectors of an economy.
Base Year: The base year was changed to 2011-12 from 2004-05 in the year 2017.
Publishing Authority: CSO under Ministry Of Statistics And Programme Implementation is responsible for the publication of Index of Industrial Production since 1950.
Components: Eight core industries comprise about 40 percent of the weight of items included in the IIP in decreasing order of their weightage are refinery products, electricity, steel, coal, crude oil, natural gas, cement,and fertilisers.
Uses of IIP Data: It is used by various government agencies such as the Ministry of Finance, the Reserve Bank of India (RBI), private firms and analysts, etc. for analytical purposes.
- The data is also used to compile the Gross Value Added (GVA) of the manufacturing sector in the Gross Domestic Product (GDP) on a quarterly basis.
Sectors:
- Broad Sectors: Mining, manufacturing and electricity.
- Use-Based Sectors: Basic goods, capital goods and intermediate goods.