Index Number of Industrial Production (IIP), Significance, Construction, Weightage of Items, Formula
🚩Timestamps:-
00:07 Session Agenda
00:41 Index Number of Industrial Production
02:43 Significance of IIP
03:58 CONSTRUCTION OF INDEX NUMBER OF INDUSTRIAL PRODUCTION
07:42 Weightage of Items
11:37 Formula
13:31 Concluding Remarks
Learning Outcomes:-
Through this module, you will gain understanding
on:-
1.
Index
Number of Industrial Production
2.
Significance
of IIP
3.
CONSTRUCTION
OF INDEX NUMBER OF INDUSTRIAL PRODUCTION
Index Number of Industrial Production
·
Index number of
industrial production is that index which measures the relative increase or
decrease in the level of industrial output in a country in comparison to the
level of production in the base year. In India, the base year for the current
series is 2011-12.
·
These index
numbers tell us about the changes in the quantum of production. These index
numbers are useful in estimating the growth of industrial production in the
economy.
It is compiled and
published monthly by the Central Statistical Organization (CSO), Ministry of
Statistics and Programme Implementation.
Significance of IIP:
1. IIP is the only measure on the physical volume of
production.
2. It is used by government agencies including the
Ministry of Finance, the Reserve Bank of India, etc, for policy-making
purposes.
3. IIP remains extremely relevant for the calculation of
the quarterly and advance GDP estimates.
CONSTRUCTION OF INDEX NUMBER OF INDUSTRIAL
PRODUCTION
(1)
Classification of Industries:
To construct index number
of industrial production, the industries are classified into following groups:
(i) Mining, (ii) Manufacturing, and (iii) Electricity.
The Index of Industrial
Production (IIP) in India is a composite indicator and The industry groups that
it measures are classified under the following:
Broad sectors
1. Eight core industries: Coal, crude oil, electricity,
fertilizers, natural gas, refinery products, steel, and cement, which make up
about 40% of the IIP's weight
2. Primary goods: Mining, electricity, fuels, and
fertilizers
Use-based sectors
3. Capital goods: Machinery items
4. Intermediate goods: Yarns, chemicals, and
semi-finished steel items
5. Infrastructure goods: Paints, cement, cables, bricks
and tiles, and rail materials
(2) Statistics
or Data Related to Industrial Production:
The data relating to the
production of the above mentioned industries are collected either monthly,
quarterly or yearly.
(3) Weightage:
Weights are given on the
basis of the relative importance of different industries. The weights are based
on the values of net output of different industries, and their contribution to
national income.
In India, the following
weightage is given to different groups at present:
Table: Sectors, number of item groups and weight as
per the 2011-12 IIP series
|
Sector |
Number of item groups |
Weight (%) |
|
1. Mining |
1 |
14.373 |
|
2. Manufacturing |
405 |
77.633 |
|
3. Electricity |
1 |
7.994 |
|
Total |
407 |
100 |
Table: Weights of the different sectors under the used
based classification – 2011-12 series
|
Sector |
Number of groups |
Weights |
|
Primary Goods |
15 |
34.05 |
|
Capital Goods |
67 |
8.22 |
|
Intermediate Goods |
110 |
17.22 |
|
Infrastructure/
Construction goods |
29 |
12.34 |
|
Consumer durables |
86 |
12.84 |
|
Consumer nondurables |
100 |
15.33 |
|
Total |
407 |
100 |
The Eight Core Industries comprise 40.27 % of the
weight of items included in the Index of Industrial Production
(IIP). These industries are:
|
Industry |
Weight |
|
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 |
|
Total |
100 |
The eight Core Industries in decreasing order of their weightage: Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilizers.
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Index Number of Industrial Production, Significance of IIP, CONSTRUCTION OF INDEX NUMBER OF INDUSTRIAL PRODUCTION, Weightage of Items, Formula | Index Numbers | 11th Commerce | by @statomics11comm
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