Contraction in July Factory Output: IIP

Contraction in July Factory Output: IIP

Part of: GS Prelims and GS-III – Economy; Industries

In news

• Recently, the National Statistical Office (NSO) has released data which highlighted the decline in the factory output (also called Industrial Production) for the fifth consecutive month.
• July 2020 posted a contraction of 10.4% compared to July 2019.
• The data also recorded a sequential improvement from 15.8% contraction seen in June. This reflects some resumption in industrial activity with the lifting of lockdown restrictions.

Important value additions

Index of Industrial Production (IIP)

• It is an indicator that measures the changes in the volume of production of industrial products during a given period.
• It is compiled and published monthly by the National Statistical Office (NSO).
• Ministry: Ministry of Statistics and Programme Implementation.
• Base Year for IIP is 2011-2012.
• Core Sector Industries comprise 40.27% of the weight of items included in IIP.
• The eight core Industries in decreasing order of their weightage: (1) Refinery Products; (2) Electricity; (3) Steel; (4) Coal; (5) Crude Oil; (6) Natural Gas; (7) Cement; (8) Fertilisers.

Do you know?

• Significance of IIP: (1) It is used by government agencies for policy-making purposes; (2) It is extremely relevant for the calculation of the quarterly and advance GDP estimates.