Index of Industrial Production(IIP)

Relevance: UPSC Prelims; Mains; GS Paper 3; Economy; Current Affairs; Daily Editorial Analysis

In recently released data, average IIP for 2024-25 is 4%, which is lowest in past few years, marking a slowdown in industrial activity.

IIP is a tool to measure changes in volume of production in Indian industries.                                

Index of Industrial Production (IIP) is an index which helps us understand the growth of various sectors in the Indian economy such as mining, electricity and manufacturing.

IIP is the performance barometer of industrial sector of an economy.

It is released monthly.

The base year of the index is given a value of 100. The current base year for the IIP series in India is 2011-12. So, if the current IIP reads 180, it means that there has been 80% industrial growth compared to the base year, i.e. 2011-12.

The IIP is published by the National Statistical Office (NSO), which is part of the Ministry of Statistics and Programme Implementation (MoSPI). ( Earlier it was released by Central Statistics Office(CSO). However CSO was merged with NSSO to create NSO in 2019)

There are 8 core industries in IIP with weightage of 40.27% in IIP.

It is known as Index of Eight Core Industries.

The weightage of each core industry in Index of core industries is as follows

In recently released data, average IIP for 2024-25 is 4%, which is lowest in past few years, marking a slowdown in industrial activity.

It can be attributed mainly to

1. Uncertainty in global economic outlook
2. Lower than expected consumption demand
3. Dip in private capital expenditure
4. Strained relationship with USA due to tariff issues
5. Geopolitical tensions

Performance of various sectors declined from FY24 to FY 25. For example

1. Mining declined from 7.5% to 2.9%
2. Manufacturing declined from 5.5% to 4%
3. Electricity declined from 7% to 5.1

India can adopt various measures to improve its industrial production and performance like

1. Effectively negotiating the Bilateral Trade Agreements
2. Focussing on MSME sector which contributes 45.8% to exports
3. Efficient implementation of National Logistics Policy 2022
4. Infrastructure development using initiatives like National Infrastructure Pipeline and PM Gati Shakti

Prelims: PYQ

(UPSC Prelims 2015)

(a) Coal production

(b) Electricity generation

(c) Fertilizer production

(d) Steel production

Answer: B

Mains Practice Question

Q) “ Index of Industrial Production is considered a monthly barometer of the nation’s industrial output”. Discuss the statement along with the recent trends of industrial production in India.      (15 marks)