IIP is an economic indicator that represents the changes in the volume of industrial products during the defined period.
This indicator is a composite of industries that are classified under Broad Sector & Use based sector.
Broad Sector includes company related to Mining, Manufacturing and Electricity industries respectively.
The use-based sector includes Basic goods, Capital goods, and Intermediate Goods.
Eight core sectors comprise 40.30% approx of the weight of items included in the Index of Industrial Production which are Refinery Products, Electricity, Steel, Coal. Crude Oil, Natural Gas, Cement, and the last one is Fertilizers.
This data is compiled and published by the National Statistical Office (NSO), which comes under MoSPI (Ministry of Statistics and Programme Implementation).
This data is very useful for the calculation of the quarterly and advance GDP estimates for the respective period. For the monetary policy discussion and decision of the lending rate, this data is used by the Reserve Bank of India.
Why today we are discussing this indictor?
Because as per yesterday's data release IIP growth is at 9 month low after it made a peak in April with 133.5% YoY change now it stood at 1.4% only in November.
This was mainly because the growth rate of manufacturing was just 0.9% and among eight core sectors mining witnessed 5% and electricity rose by 2.1% only.
Impact of this: It is visible that durable recovery is still far away because the surge in covid cases and the restrictions across the states would impact industries again.
This means we can expect more depressive data in the upcoming quarter.
Happy reading....!!!
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