News: Industrial growth touched a four-month high of 3.5% in July 2025, as per the Index of Industrial Production (IIP) released by the Ministry of Statistics and Programme Implementation.
About Index of Industrial Production (IIP)
- IIP is a monthly volume index that measures short-term changes in industrial output.
- Formula used: The index is calculated as a simple weighted arithmetic mean using Laspeyres’ formula.
- Sectors covered: It tracks production in key industrial sectors and shows whether activity is expanding or contracting over a period.
- IIP covers three broad sectors: Manufacturing (77.6% weight), Mining (14.4%), and Electricity (8%).
- The eight core industries together account for about 40.27% of the weight of items included in the IIP.
- These are refinery products, electricity, steel, coal, crude oil, natural gas, cement, and fertilizers, listed in descending order of their share.
- Published by: It is published by the Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation (MoSPI).
- It is compiled and published every month, six weeks after the reference month ends.
- Base year: The current base year is 2011–12, adopted to reflect the modern industrial structure.
- The base has been periodically revised from earlier years such as 1937, 1946, 1951, and 1956, and so on, to keep the index relevant.
- Significance
- Key high-frequency indicator of industrial momentum.
- Inputs for GDP nowcasting, monetary/fiscal policy, capacity and investment planning.
- Used to gauge business cycles and sectoral performance.
- Limitations (in the requested style):
- Narrow scope—excludes services, agriculture, and much of the unorganized sector
- Data-quality issues from reporting gaps and potential inaccuracies
- Reliance on monthly data that can obscure long-term trends
- Outdated base year/weights over time
- Quality vs quantity measurement problems for high-value, low-volume products
- Time lags and revisions
- Slow basket updates—with reforms underway to include newer products like solar panels
