Definition
The Index of Industrial Production measures changes in industrial production volume. The current series uses 2022–23 as its base year; 2011–12 belongs to the earlier series. Always identify the series before using a base year, sector weight or historical comparison.
Exam-ready points
The current sectoral weights are:
- Mining and quarrying: 11.053%
- Manufacturing: 76.062%
- Electricity and gas supply: 10.865%
- Water supply, sewerage and waste management: 2.020%
Manufacturing has the largest weight. Sectoral classification groups activities; use-based classification groups products by use. An index level is not itself a growth percentage.
- IIP is compiled and released every month by the National Statistics Office (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI).
- It is also classified by use-based categories: Primary Goods, Capital Goods, Intermediate Goods, Infrastructure/Construction Goods, Consumer Durables, and Consumer Non-durables.
- For revision, remember that IIP measures short-term volume changes, not total financial profits or nominal values.
Illustrative calculation, not reported economic data: an index rises from 120 to 126 over comparable periods in the same series. Growth = (126 − 120) ÷ 120 × 100 = 5%. The answer is 5%, not 126%. Before calculating, check that the series and comparison periods are compatible.
Common mistakes
- Do not confuse IIP with the Consumer Price Index (CPI), which tracks inflation rather than production volume.
- Do not forget that Manufacturing carries the overwhelming majority of the index weight.
- Do not treat IIP as an annual GDP estimate; it is a monthly volume index.
Difficulty
Foundation
Revision time
About 10 minutes
Self-check questions
Which base year is current? 2022–23; do not substitute the previous series’ base.
Which sector has the largest weight? Manufacturing. A sector’s weight is its assigned share in the index’s weighting structure; it is not the sector’s growth rate or its actual contribution to growth in a particular month.
How many sector groups are listed? Four. The previous three-sector list is not the current classification.
Source metadata
Authority: Press Information Bureau / Ministry of Statistics and Programme Implementation (MoSPI)
Official source: https://www.pib.gov.in/PressReleasePage.aspx?PRID=2290419&lang=1®=3