In June 2024, the Index of Eight Core Industries (ICI) rose by 4.0% compared to June 2023, with growth in coal, electricity, natural gas, steel, fertilisers, and cement.
- The ICI, which represents 40.27% of the Index of Industrial Production, recorded a cumulative growth of 5.7% from April to June 2024.
Index of Industrial Production (IIP):
- The Index of Industrial Production (IIP) is a key economic indicator that measures the performance of various industrial sectors in a country.
- It reflects changes in the production levels of the industrial sector over a specific period, providing insights into the overall economic activity.
- IIP is calculated based on the volume of production in sectors manufacturing, mining, and electricity.
Measurement and Reporting:
- The performance of these core sectors is measured through the Index of Eight Core Industries (ICI).
- The ICI is prepared and released monthly by the Office of the Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), and Ministry of Commerce & Industry.
- The ICI provides an indication of the production performance of these core industries, both individually and collectively.
Eight core industries of IIP:
1. Crude Oil: Weight: 8.98% : Total crude oil production.
2. Coal: Weight: 10.33% : Production excluding coking coal.
3. Natural Gas: Weight: 6.88% : Total natural gas production.
4. Petroleum Refinery Products: Weight: 28.04% : Total refinery production.
5. Fertilisers: Weight: 2.63% : Includes urea, ammonium sulfate, calcium ammonium nitrate, complex grade fertilizer, and single superphosphate.
6. Steel: Weight: 17.92% : Production of alloy and non-alloy steel.
7. Cement: Weight: 5.37% : Production in large and mini plants.
8. Electricity: Weight: 19.85% : Includes thermal, nuclear, hydro, and imports from Bhutan.
- The base year for the IIP is typically chosen to serve as a reference point for comparing production changes over time – the current base year for IIP is 2011-12
- The index helps in assessing the growth or contraction of industrial output, aiding policymakers and investors in making informed decisions.
- It plays a crucial role in economic planning, policy formulation, and monitoring of industrial performance.
- A higher IIP indicates industrial growth, while a lower IIP suggests a decline in production.
- The IIP is often used by the government, researchers, and analysts to analyse trends and formulate strategies for economic development.
UPSC Prelims PYQ : 2015
Ques : In the ‘Index of Eight Core Industries’, which one of the following is given the highest weight?
(a) Coal production
(b) Electricity generation
(c) Fertilizer production
(d) Steel production
Ans: (b)
