Index of Eight Core Industries – June 2019

The government has released the data of the Index of Eight Core Industries for June 2019. The monthly Index of Eight Core Industries (ICI) is a production volume index published to provide an advance estimate of the production performance by the industries considered core. The release of Index of Industrial Production (IIP) by the Central Statistics Office follows the release of the Index of Eight Core Industries.

The ICI data is widely used by several policymakers in the various Ministries and Departments, for banks looking to financing Infrastructure projects and the Reserve Bank of India to formulate future policy decisions.

Who prepares the ICI?

• The ICI is prepared by the Office of Economic Advisor, Department of Industrial Policy & Promotion, Ministry of Commerce & Industry by taking the arithmetic mean of the individual sector performances.?
• While initially there were six cores- coal, crude oil, refinery products, steel, cement and electricity, the added two more core industries- natural gas and Fertilizers later.

What comprises the ICI?

• The Eight Core Index have been given a combined weight of 40.27% in the overall Index of Industrial Production (IIP).
• While the maximum weight has been assigned to the production of refinery products, it is followed by electricity, steel and coal production.

What does the data show?

• Coal production (weight: 10.33%) would found to increase by 3.2% in June, 2019 over June, 2018.
• Crude Oil production (weight: 8.98%) however declined by 6.8% in June, 2019 over June, 2018.
• Natural Gas production (weight: 6.88%) was also observed to decline by 2.1% in June, 2019 over June, 2018.
• ?Petroleum Refinery production (weight: 28.04%) also fell by 9.3% in June, 2019 over June, 2018.
• ?Fertilizers production (weight: 2.63%) has increased by 1.5% in June, 2019 over June, 2018.
• ?Steel production (weight: 17.92%) also increased by 6.9% in June, 2019 over June, 2018.
• Cement production (weight: 5.37%) saw a decline by 1.5% in June, 2019 over June, 2018.
• Electricity generation (weight: 19.85%) showed a major increase by 7.3% in June, 2019 over June, 2018.

The Government has however clarified that the ICI Data for April, 2019, May, 2019 and June, 2019 are provisional and may be modified when better figures can be obtained.