Core Industries, IIP and Annual Survey of India

What is in the news?

• Output from India’s eight core sectors hit a three-month low in November, contracting 2.6% in the festive month with coal, fertilizers and electricity the only sectors to record positive growth on a year-on-year basis, suggesting the economy is still not out of the woods.
• The good news is that the Index of Eight Core Industries was revised upwards for both August and October, based on updated data inputs received by the Office of Economic Adviser in the Department for Promotion of Industry and Internal Trade that compiles the data.
• Core sector output shrank by just 0.9% in October compared to an earlier estimate of 2.5% contraction.
• On a cumulative basis from April to November, the eight sectors’ index has declined 11.4% from the same period a year ago.

Index of Core Industries

1. The index of Core Industries (ICI) is a production volume index.
2. Its aim is to provide an advanced indication of the production performance of core industries before IIP releases.
3. It is compiled by DPIIT, Ministry of Commerce.
4. There are 8 Core industries: 4 Energy-related = Coal production ( but not Coking Coal), Crude Oil, Natural Gas, Electricity (including imports from Bhutan) and 4 infrastructure related = Refinery Products, Fertilizers, Steel and Cement.
5. Index of Core Industries covers 40.27% in IIP. The weight of Petroleum Refinery is maximum followed by Electricity, Steel, Coal, Crude Oil, Natural Gas, Cement and Fertilizers is minimum.
6. It is released monthly like IIP. The ICI is calculated by using Laspeyres formula.

Index of Industrial Production

1. IIP measures the changes in the industrial production and captures the general level of industrial activity.
2. Base year is 2011-12. It is compiled on the basis of data of 15 ministries.
3. It is compiled by CSO, Ministry of Statistics and Programme Implementation, every month.
4. There are 3 broad Component sectors in IIP – Manufacturing (77.6%), Mining (14.3%) and Electricity (7.9%).
5. Use based classification: 4 components:

1. Basic goods (45.68%)
2. Consumer Goods (29.81%)
3. Intermediate goods (15.68%) and
4. Capital Goods (8.83%).

6. It is a short term indicators of industrial growth till results from ASI and National Account Statistics

NIA (national income accounts) vs IIP

1. The data of IIP is used to calculate NIA and GDP forecasts.
2. NIA uses IIP data to proxy the growth in unorganised sector (otherwise it is estimated only with the gap of 5 years).

Annual Survey of Industries

1. It is a most comprehensive and the principle source of industrial statistics which provides information on organized manufacturing sector only.
2. ASI is calculated on an annual basis published every 2 years by CSO (while ICI & IIP on a monthly basis).
3. It comes with a 2 year lag.
4. Base year is 2013-14.
5. ASI obtains comprehensive and detailed statistics of industrial sector.