DDI-IND-CSO-IIP-APR-2019
Index of Industrial Production (IIP) with Base year 2011-12 upto May 2019
Comparison of economic performance over time is a key factor in economic analysis and a fundamental requirement for policy-making. Short-term indicators play an important role in this context by providing such comparison indicators. Among the short-term indicators, the Index of Industrial Production (IIP) has historically been one of the most well-known and well-used indicators. 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 Statistics Office (CSO) with a time lag of six weeks from the reference month.
Importance of IIP : The all-India IIP provides a single representative figure to measure the general level of industrial activity in the economy on a monthly basis. It is used by Government agencies/ departments especially the Ministry of Finance, the Reserve Bank of India, etc. for policy purposes. The all-India IIP forms a crucial input for compilation of Gross Value Added of Manufacturing sector in Gross Domestic Product of the country on quarterly basis. It is also used extensively by financial intermediaries, policy analysts and private companies for various analytical purposes suited for their requirements.
On approval of the competent authority, all India IIP is released every month as Quick Estimate with a time lag of 42 days every month at 5.30 PM on 12th (or previous working day, if 12th is holiday) through Press Information Bureau as well as on the Ministry's website. The press statement includes indices and growth rates at the sectoral level, at NIC 2-digit level and as per the new Use-Based classification. Also the time series of indices are accessible and downloadable in excel format from the Ministry's website. (Link: http://mospi.nic.in/iip-2011-12-series ) With regard to the presentation and dissemination of indices, following are followed as per the international recommendation:
The Ministry of Statistics and Programme Implementation website http://mospi.nic.in/iip-2011-12-series disseminates the following time series data: (1) monthly and annual indices at the 2-digit level of National Industrial Classification (NIC)- 2008 along with the three sector sub-indices (mining, manufacturing, and electricity) starting from April 2012; (2) monthly and annual indices for use-based categories (primary goods, capital goods, intermediate goods, infrastructure/ construction goods, consumer durable goods, and consumer non-durable goods) starting from April 2012. 4.2.3 Inter-sectoral and cross-domain consistency Consistency with Other Indicators of Industrial Production: Index of Industrial Production is only a short term indicator, used till the detailed results of Annual Survey of Industries are available. Till the ASI results are available, the IIP figures are used in compilation of National Accounts and hence the GDP figures are in close alignment with the IIP.
UNSD recommends inclusion of Mining & Quarrying; Manufacturing; Electricity, Gas steam and Air-conditioning supply; as well as Water supply, Sewerage, Waste management and Remediation activities. Due to constraints of the data availability on monthly basis, scope of the all-India IIP with base 2011-12 is limited to Mining, Manufacturing and Electricity sectors only.
Unit Selection: Frame for coverage of units is decided by the source agencies which collect data from the factories. For compilation of IIP both large and medium factories are covered for collection of data by the source agencies.
version 1.0
| Topic |
|---|
| Mining products |
| Electricity |
| Instant Coffee |
| Jute items |
| Railway running stock and parts |
Scope of the data
Industrial Coverage: Although UNSD guidelines state that IIP is to be compiled for activities in ISIC Rev. 4 Sections B, C, D and E, i.e. (i) Mining and quarrying, (ii) Manufacturing, (iii) Electricity, Gas, Steam and Air-conditioning supply and (iv) Water supply, Sewerage, Waste management and Remediation activities, due to constraints of the data availability and other resources, the index is being compiled with (i) Mining, (ii) Manufacturing and (iii) Electricity as scope of All India IIP. In the current base year (i.e. 2011-12), the index covers 839 items clubbed into 407 item groups under three sectors i.e. Mining (29 items clubbed into 1 item group), Manufacturing (809 items clubbed into 405 item groups) and Electricity (1 item) with weights of 14.37%, 77.63% and 7.99% respectively.
The mining sector covers 29 items under different headings viz. Fuel Minerals, Metallic Minerals and Non-Metallic Minerals. This sector also includes Crude Petroleum, Natural Gas, Coal and Lignite. The manufacturing sector covers 809 items under different groups e.g. Food products, Beverages, Textiles, Chemicals and chemical products etc. The Electricity sector is treated as a single item.
Product Coverage: Within an industry the products are covered on the basis of the concepts of Primary (Main) Product as well as Secondary (By) Product. All those items which represent at least 80% of the output within each industry group, i.e., 3-digit industry of NIC-2008 (based on ISIC 4) have been included in the Item basket. Essential products like tea, coffee, salt and sugar have been included. The over-riding criteria for finalization of item basket have been the regular monthly flow of
production data from the source agencies/collection authorities.
| Name | Affiliation |
|---|---|
| CSO, Economics and Statistics division | Min. of Statistics & PI |
| Name | Affiliation | Role |
|---|---|---|
| CSO ESD | MoSPI | Analysis , design and processing |
| DSDD(including CC) | MoSPI | Documentation and dissemination |
| Name | Abbreviation |
|---|---|
| Government of India | GoI |
Sample Size: The sample size for data collection is decided by the source agencies. Generally, efforts are made to cover all the major units.
statistical techniques :
Procedures for Non-Response: In India, the Index of Industrial Production is based on the responded production as well as estimated production for non-responding units. The production estimates for the non-responding units are developed using various methods including: repetition of last available data; taking the average production data for the last few months; using previous year's growth rate; etc. The appropriate estimation procedure is decided by the source agencies themselves in consultation with CSO. Treatment of Missing Production: The index is compiled on the basis of the data on a fixed number of items collected from the source agencies which in turn collect the data from different factories and estimate the data on their own, as per the requirements. Selection of Replacement Items: Replacement of items is not done at present. Introducing New Units and Products: New units/ new products are included only at the time of the revision of base year.
Other statistical procedures : The production figures, if not reported by all the units in the current month due to any reason, are estimated for the current month and revised subsequently in the next month, and finally in the third month on the basis of which the final indices for a month are calculated.
Nature of Weights: The weights for the three sectors (mining, manufacturing, and electricity) are based on share of the sector in total domestic production in the base year. The overall weight of the manufacturing sector is apportioned to the industry groups at the 2-digit, 3-digit- and 4-digit level of the National Industrial Classification (NIC) 2008, on the basis of the Gross Value Added (GVA). The weighting diagram for the current series of IIP is prepared on the basis of GVA up to the 2-digit, 3 and 4 digit level of NIC based on the results of ASI 2011- 12. At the final level (i.e. 5 digit level of NIC), weights to items have been distributed on the basis of Gross Value of Output (GVO). The weights of selected items within an industry group are apportioned on the basis of the value of output.
Period of Current Index Weights: The current index weights are based on the value of production of the industries during the base year period viz. April, 2011 to March 2012 as reported in the Annual Survey of Industries for the year 2011-12. The same weights are used until the revision of the base year is done.
Frequency of Weight Updates: The weights are revised with every revision of the base year. The base year was revised to 2011-12 from 2004-05 in May 2017. Efforts would be made to revise the base year once in every five years as per UNSD's recommendations (the previous base years of the index were 2004-05, 1993-94, 1980-81, 1970, 1956, 1951 and 1946).
Computation of lowest level indices: The lowest level, for which an index is prepared, is the item group. It is compiled as the ratio of production quantity in the current month with respect to its average monthly production quantity in the base year.
Aggregation: The IIP is calculated using the Laspeyres formula as a weighted arithmetic average of production relatives. The index is primarily quantity based, although for some item groups the quantity relatives are obtained by price deflation.
The index at group level/ 2-digit level of NIC is compiled by using the Laspeyeres' formula, i.e. I = Uppercase sigma(Wi*Ri)/ Uppercase sigm(Wi)
where Ri is the production relative and Wi is the weight of an item.
The index is prepared for each two-digit level of NIC. Also the index is prepared on the basis of the following use-based classification: Primary Goods, Capital Goods, Intermediate Goods, Infrastructure/ Construction Goods, Durable Consumer Goods and Non-Durable Consumer Goods.
-- Linking of Re-weighted Index to Historical Index: Whenever there is change in the base year, the new series can be linked with the old series by preparing linked series. For the common period, the index series are available with both old weights & new weights for linking the two series.
The weights for the three sectors (mining, manufacturing, and electricity) are based on share of the sector in total domestic production in the base year. The overall weight of the
manufacturing sector is apportioned to the industry groups at the 2-digit, 3-digit- and 4-digit level of the National Industrial Classification (NIC) 2008, on the basis of the Gross Value Added (GVA). The weighting diagram for the current series of IIP is prepared on the basis of GVA up to the 2-digit, 3 and 4 digit level of NIC based on the results of ASI 2011-12. At the final level (i.e. 5 digit level of NIC), weights to items have been distributed on the basis of Gross Value of Output (GVO). The weights of selected items within an industry group are apportioned on the basis of the value of output. Period of Current Index Weights: The current index weights are based on the value of production of the industries during the base year period viz. April, 2011 to March 2012 as reported in the Annual Survey of Industries for the year 2011-12. The same weights are used until the revision of the base year is done.
Frequency of Weight Updates: The weights are revised with every revision of the base year. The base year was revised to 2011-12 from 2004-05 in May 2017. Efforts would be made to revise the base year once in every five years as per UNSD's recommendations (the previous base years of the index were 2004-05, 1993-94, 1980-81, 1970, 1956, 1951
and 1946).
-- Computation of lowest level indices: The lowest level, for which an index is prepared, is the item group. It is compiled as the ratio of production quantity in the current month with
respect to its average monthly production quantity in the base year.
-- Aggregation: The IIP is calculated using the Laspeyres formula as a weighted arithmetic average of production relatives. The index is primarily quantity based, although for some
item groups the quantity relatives are obtained by price deflation.
The index at group level/ 2-digit level of NIC is compiled by using the Laspeyeres’ formula, i.e.: I =uppercase sigm (Wi*Ri)/ uppercase sigm(Wi) where Ri is the production relative and Wi is the weight of an item. The index is prepared for each two-digit level of NIC. Also the index is prepared on the basis of the following use-based classification: Primary Goods, Capital Goods, Intermediate Goods, Infrastructure/ Construction Goods, Durable Consumer Goods and Non-Durable Consumer Goods.
-- Alignment of Value of Weights and Base Period: No alignment of the weights is required as the weights as well as the base year production relate to the same reference period viz. April, 2011 to March 2012.
-- Linking of Re-weighted Index to Historical Index: Whenever there is change in the base year, the new series can be linked with the old series by preparing linked series. For the common period, the index series are available with both old weights & new weights for linking the two series.
-- Reference Period: The reference period for the current index of industrial production in India is 2011-12, when the index=100.
-- Seasonally Adjusted Indices: Not being done at present.
Data for compilation of IIP in new series is sourced from 14 source agencies in various Ministries/Departments. Each of the source agencies based on their administrative domain, collect the production data of the concerned list of item groups, and provide the same to Economic Statistics Division, CSO after due validation.
Source agencies provide the monthly data in prescribed format . Every month, 1276 records are received from source agencies. This includes data for the three months (quick estimate, first revision and final revision), Wholesale Price Indices to be used as deflators, as well as information on number of units responding and volume of estimation.
DDI-IND-CSO-IIP-MAY-2019
| Name | Abbreviation | Affiliation | Role |
|---|---|---|---|
| DSDD(including Computer Centre) | MoSPI, DSDD | Min. of Statistics & PI | study document |
