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Indian Economy

Industrial Output Grows in February

  • 10 Apr 2020
  • 2 min read

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.
  • 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.

Source: TH

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