Index For Industrial Production

By Author: CA Dr Aman Chugh
Total Articles: 2
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Index for industrial production (IIP) is an index computed and published by the Central Statistical Organisation on a monthly basis, to depict the growth in various industrial sectors of the economy, classified as follows:-
1. Broad sectors namely - mining, manufacturing and electricity
2. Use based sectors - Basic goods, intermediate and capital goods.
Indices are always constructed with some base year that is referred to check how much the index has grown during a specified period of time. Presently the base year for IIP is 2011-12 with a base value of 100. It is to be noted here that even though IIP is calculated on a monthly basis, monthly figures are never compared to each other. For comparison, the base year is always referred to. e.g. if the IIP for the month of January 2020 is 140, it means the industrial production has increased by 40% as compared to the 2011-12 levels.

Now the question may arise as to what is primary, intermediate and capital goods.
Primary goods are the goods that are available because of raw material cultivation. Generally, there's no manufacturing process involved ...
... in their production. e.g. agricultural goods, forestry, fisheries, oil. Mostly these goods act as the inputs for further consumption or production.
Intermediate goods, also called producer goods or semi-finished goods help in the production of other (final) goods. Firms and companies can either make and use them in further production, or make and sell them off (since they have a ready market), or buy and use them for further production. e.g. steel, paints, glass, plywood.
Capital goods are complex products and systems (COPS). These are durable goods which are one of the primary factors of production. Basically, the setup of tools, machinery and equipment used in production processes are all a part of capital goods. e.g. tools and machine tools, semiconductor plants, turbines, computers, even heavy moving vehicles. These are used in the production of consumer goods.