Index of Industrial Production (IIP)

Index of Industrial Production (IIP) for UPSC
  • The Index of Industrial Production (IIP) is widely used in measuring the industrial growth of the State.
  • It is ashort-term micro economic indicator.
    • Tll the results from Annual Survey of Industries (ASI) and National Accounts Statistics (Eg: GDP) are available.
  • It is an effective tool to measure the trend of current industrial production.
  • The Index measures the industrial production for the period under review, usually a month, as against the reference period.
  • There is a lag of six weeks in the publication of the IIP index data after the reference month ends.
  • It is currently calculated using 2011-2012 as the base year.
  • The index is released by the Central Statistics Office (CSO) of the Ministry of Statistics and Programme Implementation.

Index of Industrial Production (IIP) Index Components

  • IIP is a composite indicator that measures the growth rate of industry groups classified under,
    • Broad sectors: Mining (14.4%), Manufacturing (77.6%) and Electricity (8%)
    • Use-based sectors: Basic Goods, Capital Goods and Intermediate Goods etc.

Significance of Index of Industrial Production (IIP)

  • It is used by government agencies including the Ministry of Finance, the Reserve Bank of India, etc, for policy-making purposes.
  • IIP is the only measure on the physical volume of production.
  • 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.
  • IIP remains extremely relevant for the calculation of the quarterly and advance GDP estimates.
  • It is also used extensively by financial intermediaries, policy analysts and private companies for various analytical purposes.

Latest News

  • 03 september 2022: India’s eight core sectors’ output growth dropped to a six-month low of 4.5% in July from 13.2% in June, with crude oil and natural gas output declining from a year ago and growth in sectors like cement and electricity dropping to around 2%.


  1. The Hindu
  2. SME Times

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