IIP output contracts 0.1% in June 2017

August 12, 2017

India’s factory output, measured by the Index of Industrial Production (IIP) has registered negative 0.1% growth in June 2017. It was mainly due to a fall in output of the manufacturing and capital goods sectors.
According to data released by the Central Statistics Office (CSO) it is the first negative fall since June 2013. In June 2016, it had grown 8%.

Key Facts

Manufacturing sector: It contracted by 0.4% in June 2017.
Mining output: It rose by 0.4%.
Electricity generation: It increased by 2.1%.
Capital goods output: is a barometer of investment. It shrank by 6.8% in June 2017.
Consumer durables output: It contracted by 2.1%.
Consumer non-durables production: It rose by 4.9%.

About Index of Industrial Production (IIP)

The 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 chosen base period. It is compiled and published monthly by the Central Statistical Organization (CSO), Ministry of Statistics and Programme Implementation.
Base year: The CSO had revised the base year of the IIP from 2004-05 to 2011-12 in May 2017 to capture structural changes in the economy and improves the quality and representativeness of the indices. The revised IIP (2011-12) reflects the changes in the industrial sector and also aligns it with the base year of other macroeconomic indicators like the Wholesale Price Index (WPI) and Gross Domestic Product (GDP).
Sector wise items and weightages: It covers 407 item groups. Sector wise, the items included falls into 3 categories viz. Manufacturing (405 items), Mining (1 items) & Electricity (1 item). The weights of the three sectors are 77.63%, 14.37%, 7.9% respectively. The revised eight core Industries have a combined weightage of 40.27% in the IIP. Decreasing order of weightage of core industries is Electricity> Steel> Refinery Products> Crude> Coal> Cement> Natural Gas> Fertilizers.

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