Index of industrial production

The Index of Industrial Production (IIP) is an index for India which details out the growth of various sectors in an economy such as mining, electricity and manufacturing. The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period. It is compiled and published monthly by the Central Statistical Organisation (CSO) six weeks after the reference month ends.

The level of the Index of Industrial Production (IIP) is an abstract number, the magnitude of which represents the status of production in the industrial sector for a given period of time as compared to a reference period of time. The base year was at one time fixed at 1993–94 so that year was assigned an index level of 100. The current base year is 2011-2012..

The Eight Core Industries comprise nearly 38 % of the weight of items included in the Index of Industrial Production (IIP). These are Electricity , steel, refinery products, crude oil, coal, cement, natural gas and fertilisers.

The first official attempt to compute the IIP was made much earlier than even the recommendations on the subject at the international level. The Office of the Economic Advisor, Ministry of Commerce and Industry made the first attempt of compilation and release of IIP with base year 1937, covering 15 important industries, accounting for more than 90 percent of the total production of the selected industries. The all-India IIP is being released as a monthly series since 1950. With the inception of the Central Statistical Organization in 1951, the responsibility for compilation and publication of IIP was vested with this office.

As the structure of the industrial sector changes over time, it became necessary to revise the base year of the IIP periodically to capture the changing composition of industrial production and emergence of new products and services so as to measure the real growth of industrial sector (UNSO recommends quinquennial revision of the base year of IIP). After 1937, the successive revised base years were 1946, 1951, 1956, 1960, 1970, 1980–81 and 1993–94. Initially it was covering 15 industries comprising three broad categories: mining, manufacturing and electricity. The scope of the index was restricted to mining and manufacturing sectors consisting of 20 industries with 35 items, when the base year was shifted to 1946 by Economic Adviser, Ministry of Commerce & Industry and it was called Interim Index of Industrial Production. This index was discontinued in April 1956 due to certain shortcomings and was replaced by the revised index with 1951 as the base year covering 88 items, broadly categorised as mining & quarrying (2), manufacturing (17) and electricity (1) compiled by CSO. The items in this index were classified according to the International Standard Industrial Classification (ISIC) 1948 of all economic activities.

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