IIP growth slows to 1.7%, retail inflation rises to 2.57%

Prelims level : Industry Mains level : GS - III
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Industrial activity slowed in January 2019 growing by just 1.7% due in large part to a deceleration in the manufacturing, electricity, and capital goods sectors. In a separate release, government data showed that retail inflation in February snapped a four-month declining trend by rising to 2.57%.

The Index of Industrial Production (IIP) saw growth slip below the 2% for the second time in three months in January, with the previous occurrence being the 0.32% growth seen in November 2018. Growth in the IIP was at 2.6 in December.

Index of Industrial Production (IIP)

  • IIP is compiled and published by Central Statistics Office(CSO)
  • It is published every month
  • It covers 865 (Older series 682) items comprising :
    • Manufacturing (809 items, Older series 620 items),
    • Mining (55 items, Older Series 61 items) &
    • Electricity (1 item).
  • The weights of the three sectors are :
    • Manufacturing – 77.63%,
    • Mining – 14.37%,
    • Electricity – 7.99%
  • Base year for IIP is 2011-2012 (Earlier 2004-05) i.e. it is calculated on the basis of their share of GDP at factor cost during 2011-12.
  • The eight Core Industries comprise nearly 40.27 % of the weight of items included in IIP. They are :
    • Coal (10.33%)
    • Crude oil (8.98%)
    • Natural gas (6.88%)
    • Refinery products (28.04%)
    • Fertilisers (2.63%)
    • Steel (17.92%)
    • Cement (5.37%)
    • Electricity (19.85%)
  • In IIP, the decreasing order of core industries among them is as:

Main Changes:

  • Base year has been changed from 2004-05 to 2011-12
  • Number of items has been changed (See details below)
  • There will be 407item groups
  • The new series of IIP will include technology items like smart phones, tablets, LED television etc.
  • A technical review committee has also been established to identify new items by ensuring that the series remains relevant. The committee is slated to meet at least once a year.
  • The revised IIP (2011-12) reflects the changes in industrial sector and also aligns it with base year of other macroeconomic indicators like Wholesale Price Index (WPI) and Gross Domestic Product (GDP).
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