{"id":6635,"date":"2023-01-13T09:58:32","date_gmt":"2023-01-13T04:28:32","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=6635"},"modified":"2025-03-27T16:03:43","modified_gmt":"2025-03-27T10:33:43","slug":"what-is-base-effect","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/what-is-base-effect\/","title":{"rendered":"What is Base Effect?"},"content":{"rendered":"<h2><strong>Why in news?<\/strong><\/h2>\n<ul>\n<li>The rise was aided by base effects as November 2021 had clocked just 1% growth, but also marked a 6% uptick in output levels over October 22, which incidentally recorded the lowest level for the Index of Industrial Production (IIP) since November 2021.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>What is a Base Effect?<\/strong><\/h2>\n<ul>\n<li>The base effect is the<strong> impact that selecting a different reference point for a comparison between two data points can have on the comparison&#8217;s outcome.<\/strong><\/li>\n<li><strong>For Eg:<\/strong> In the context of inflation, the <strong>base effect is a distortion in a current inflation figure caused by exceptionally high or low levels of inflation in the previous reference period.<\/strong><\/li>\n<li>If the inflation rate was low in the corresponding period of the last year, then even a small increase in the price index will give a high rate of inflation in the current year.<\/li>\n<li>When comparing two data points, choosing a reference point will be crucial as the <strong>base effect can highly distort or mislead the interpretation of numbers.<\/strong><\/li>\n<li>The <strong>base effect could also result in major differences in percentage comparisons.<\/strong> If we chose a reference point that is too low, there could be an overestimation and if the base is too high, it could result in gross underestimation of the situation.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<h2><strong>Index of Industrial Production (IIP)?<\/strong><\/h2>\n<ul>\n<li>The Index of Industrial Production (IIP) is an index which <strong>shows the growth rates in different industry groups of the economy <\/strong>in a stipulated period of time.<\/li>\n<li><strong>Who publishes IIP?<\/strong> The IIP index is computed and published by the <strong>Central Statistical Organisation (CSO) <\/strong>under the Ministry of Statistics and Programme Implementation on a<strong> monthly basis.<\/strong><\/li>\n<li>Currently IIP figures are calculated considering <strong>2004-05 as base year.<\/strong><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<hr \/>\n<h3><strong>Q1) What is the Price Index?<\/strong><\/h3>\n<p>\u00a0A price index is a measure of the average change in the price of a basket of goods and services over time. It is used to track inflation.<\/p>\n<p><strong>Source:\u00a0<\/strong><a href=\"https:\/\/www.thehindu.com\/business\/industrial-production-expands-at-5-month-high-of-71-in-november-govt-data\/article66370134.ece#:~:text=India&#039;s%20industrial%20output%20bounced%20back,2022%20as%20per%20revised%20estimates.\" target=\"_blank\" rel=\"nofollow noopener\">Industrial output bounced back to rise 7.1% in November<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The base effect is the impact of selecting a different reference point for a comparison on its outcome.<\/p>\n","protected":false},"author":5,"featured_media":6636,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-6635","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/6635","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=6635"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/6635\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/6636"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=6635"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=6635"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=6635"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}