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Saturday, May 28, 2011

What is IIP (Index of Industrilal Production) ?

IIP (Index of Industrial Production)
IIP gives the growth of various sectors of the economy like Manufacturing, Mining and Electricity etc.
In India CSO (Central Statistical Organization) compiles and releases the IIP figures.
IIP is the monthly index and measures the change in volume of industrial production.
Current series takes FY 1994 as the base and considers 538 individual items clubbed into 283 groups.
In India, IIP includes only 3 sectors –Manufacturing, Electricity and Mining.
Manufacturing sector carries the highest weightage of 79.36 while Mining and Electricity sectors are given weightage of 10.43 and 10.17 respectively.

Manufacturing sector is further sub divided into Basic Goods, Intermediate Goods, Capital Goods, Consumer Non-Durable and Consumer Durable.
IIP is a quantitative index and its formula is the arithmetic mean of production relatives.
I= ∑Wi*Ri / ∑Wi
Wi: Weightage assigned to the ith item
Ri : production related to ith item.

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