India’s February IIP grows at 5.7%

What’s in today’s article?

● Why in News?

● What is Index of Industrial Production (IIP)?

● What is Consumer Price Index (CPI)?

● Retail Inflation for March 2024

● Growth in the IIP for February 2024

Why in News?

Growth in India’s industrial output accelerated to 5.7 percent in February, according to data released by the Ministry of Statistics and Programme Implementation.

Also, India’s consumer price index (CPI)-based inflation rate eased to 4.85% in March from 5.09% in February. However, it remained well above the Reserve Bank of India’s (RBI’s) 4 per cent target.

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What is Index of Industrial Production (IIP)?

• About
  • The IIP number measures the industrial production for the period under review, usually a month, as against the reference period.
  • There is a lag of six weeks in the publication of the IIP index data after the reference month ends.
  • It is currently calculated using 2011-2012 as the base year.
• Institution involved
  • National Statistical Organisation (NSO) under the Ministry of Statistics and Programme Implementation (MoSPI) releases the IIP data.
• IIP Index Components
  • IIP is a composite indicator that measures the growth rate of industry groups classified under:
• Broad sectors, namely, Mining (14.4%), Manufacturing (77.6%) and Electricity (8%)
• Use-based sectors, namely Basic Goods, Capital Goods and Intermediate Goods etc.
  • These Eight Core Industries mentioned in above section comprise 40.27 percent of the weight of items included in the IIP.

What is Consumer Price Index (CPI)?

• CPI is a metric that measures retail inflation by collecting data on the prices of goods and services that are consumed by the retail population of the country.
• The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation releases CPI.
  • CPI is released for all-India and States/UTs separately for rural, urban and combined (national).
• Currently, CPI is calculated using 2012 as a base year.
• Items for the CPI basket of goods and services classified across categories.
  • Few of the categories are; food and beverages, clothing, housing, fuel and light, recreation and etc.
• All categories are assigned weights (as shown in the diagram).
  • Currently, CPI is calculated by taking into consideration 299 items.

Retail Inflation for March 2024

• India’s retail inflation rate eased to a 10-month low in March 2024. This fall was led by fuel and light group (-3.24 per cent), reflecting a decline in cooking gas prices.
• Food and beverages inflation remained elevated, easing only marginally to 7.7 per cent in March from 7.8 per cent in February.
• However, core inflation, which excludes volatile food and fuel items, continued to decelerate in March to 3.25 per cent.

Growth in the IIP for February 2024

• Growth in the IIP expanded to 5.7 per cent in February 2024.
• It was boosted by output growth in mining (8 per cent) and electricity (7.5 per cent) while manufacturing output (5 per cent) remained the laggard.
• In terms of the use-based classification of goods, production growth in February was as follows:
  • Capital goods increased at 1.2 percent;
  • Intermediate goods increased at 9.5 percent;
  • Infrastructure goods rose to 8.5 percent;
  • Consumer durable rose to 12.3 percent;
  • Consumer non-durable goods fell to 3.8 percent

Q.1. What is National Statistical Organization (NSO)?

The National Statistical Organization (NSO) is a government organization that was formed in 2019 by merging the Central Statistics Office (CSO) and the National Sample Survey Office (NSSO). The NSO is part of the Ministry of Statistics and Programme Implementation (MOSPI).

Q.2. What is core inflation?

Core inflation is a measure of long-term price trends that excludes volatile price changes, such as food and energy. It is derived from headline inflation and is measured by excluding food and fuel from the Consumer Price Index (CPI) or Wholesale Price Index (WPI).

Source: India’s February IIP grows at 5.7% from 3.8% a month back

Office of Economic Adviser

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