Industrial production shrinks 0.3% in December

Industrial production shrinks 0.3% in December

In news:

• The Index of Industrial Production (IIP) had grown by 2.5% in December 2018.
• India’s industrial production growth turned negative in December, contracting by 0.3%, mainly on account of a decline in manufacturing sector output
• According to the National Statistical Office (NSO) data, the manufacturing sector output contracted by 1.2% in December 2019 as against a growth 2.9%

From Prelims Point of View:

Index of Industrial Production 

• Growth rates in different industry groups of the economy in a fixed period of time.
• It is compiled and published monthly by the Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation.

Composite indicator rate of industry groups classified under:

• Broad sectors, namely, Mining, Manufacturing, and Electricity.
• Use-based sectors, namely Basic Goods, Capital Goods, and Intermediate Goods.

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.