Index of Industrial Production (IIP)

Index of Industrial Production (IIP) Latest News

Industrial output grew by only 2.9% in February 2025, marking the slowest growth in six months, well below the market expectation of 4%.

About the Index of Industrial Production (IIP)

• The Index of Industrial Production (IIP) is a key statistical tool used to measure the short-term changes in the volume of production in Indian industries. 
• It provides insight into the growth or contraction of industrial activity over a given period, making it a crucial economic performance indicator.
• The IIP is published by the Central Statistics Office(CSO), which is part of the Ministry of Statistics and Programme Implementation (MoSPI).
• The current base year for the index is 2011–12. This base year was adopted to reflect modern industrial structure and production patterns, following periodic revisions from earlier base years such as 1937, 1946, 1951, 1956, and so on.
• Sectoral Composition of IIP (Weight-wise): 
  • Manufacturing: 77.63% of total weight (809 items)
  • Mining: 14.37% (29 items)
  • Electricity: 7.99% (1 item)
• Sectoral Growth (Year-on-Year in February)
  • Mining: Slowed sharply to 1.6%, down from 8.1% in Feb 2024.
  • Manufacturing: Grew at 2.9%, lower than 4.9% a year ago.
  • Electricity: Output growth dropped to 3.6% from 7.6% in Feb 2024.

Eight Core Industries (Weight in IIP: 40.27%)

• Listed in decreasing order of weightage:
  • Refinery Products
  • Electricity
  • Steel
  • Coal
  • Crude Oil
  • Natural Gas
  • Cement
  • Fertilisers

Index of Industrial Production (IIP) FAQs

Q1. What does the Index of Industrial Production (IIP) measure?
Ans. The IIP tracks short-term changes in industrial output, covering mining, manufacturing, and electricity sectors. It uses a base year (currently 2011-12) to measure volume growth.

Q2. Why is the IIP significant for policymakers?
An. It serves as a lead indicator of economic health, guiding monetary policy and industrial strategies. However, it excludes unorganized sectors, limiting its comprehensive assessment.

Q3. What are the limitations of the IIP?
Ans. It excludes services and informal sectors, relies on outdated base years, and faces data lags. Recent reforms aim to include newer products like solar panels.

Source: TH