Industrial Output Grows in February | 10 Apr 2020
Why in News
According to recent data released by the National Statistical Office, the Index of Industrial Production (IIP) accelerated at 4.5% in February in comparison to the previous year.
Key Points
- Higher output in mining, electricity and manufacturing sectors is the reason behind the IIP growth.
- Recently, the eight core sector industries also recorded a growth of 5.5% in February, 2020 which is highest in 11-months.
- The mining sector saw a robust 10% growth in production, while the electricity sector saw 8.1% growth and manufacturing sector output grew at a rate of 3.2%.
- However, the auto sector, computer and electronics manufacturing output saw negative growth.
- February saw the second straight month of improved industrial output after a contraction in December.
- However, the IIP is likely to plunge again for March, due to the lockdown caused by the Covid-19 pandemic, which has resulted in a halt in most business.
Index of Industrial Production
- The Index of Industrial Production (IIP) is an index that shows the growth rates in different industry groups of the economy in a fixed period of time.
- It is compiled and published monthly by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.
- IIP is a composite indicator that measures the growth rate of industry groups classified under:
- Broad sectors, namely, Mining, Manufacturing, and Electricity.
- Use-based sectors, namely Basic Goods, Capital Goods, and Intermediate Goods.
- Base Year for IIP is 2011-2012.
- The eight core industries of India represent about 40% of the weight of items that are included in the IIP.
- Significance of IIP :
- IIP is the only measure on the physical volume of production.
- It is used by government agencies including the Ministry of Finance, the Reserve Bank of India, etc, for policy-making purposes.
- IIP remains extremely relevant for the calculation of the quarterly and advance GDP estimates.