12-Feb-2020: Quick Estimates of Index of Industrial Production and use-based Index for the Month of December, 2019 (Base 2011-12=100)

The Quick Estimates of Index of Industrial Production (IIP) with base 2011-12 for the month of December 2019 stands at 133.5, which is 0.3 percent lower as compared to the level in the month of December 2018. The cumulative growth for the period April-December 2019 over the corresponding period of the previous year stands at 0.5 percent.

The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of December 2019 stand at 120.6, 134.2 and 150.2 respectively, with the corresponding growth rates of 5.4 percent, (-) 1.2 percent and (-) 0.1 percent as compared to December 2018. The cumulative growth in these three sectors during April-December 2019 over the corresponding period of 2018 has been 0.6 percent, 0.5 percent and 0.8 percent respectively.

In terms of industries, sixteen out of the twenty three industry groups (as per 2-digit level of National Industrial Classification-2008) in the manufacturing sector have shown negative growth during the month of December 2019 as compared to the corresponding month of the previous yea. The industry group ‘Manufacture of computer, electronic and optical products’ has shown the highest negative growth of (-) 24.9 percent followed by (-) 20.3 percent in ‘Manufacture of machinery and equipment n.e.c.’ and (-) 15.5 percent in ‘Printing and reproduction of recorded media’. On the other hand, the industry group ‘Manufacture of basic metals’ has shown the highest positive growth of 14.2 percent followed by 13.2 percent in ‘Manufacture of wood and products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials’ and 5.9 percent in ‘Manufacture of leather and related products’.

As per Use-based classification, the growth rates in December 2019 over December 2018 are 2.2 percent in Primary goods, (-) 18.2 percent in Capital goods, 12.5 percent in Intermediate goods and (-) 2.6 percent in Infrastructure/ Construction Goods. The Consumer durables and Consumer non-durables have recorded growth of (-) 6.7 percent and (-) 3.7 percent respectively.

Along with the Quick Estimates of IIP for the month of December 2019, the indices for November 2019 have undergone the first revision and those for September 2019 have undergone the final revision in the light of the updated data received from the source agencies.

Statements giving Quick Estimates of the Index of Industrial Production at Sectoral, 2-digit level of National Industrial Classification (NIC-2008) and by Use-based classification for the month of December 2019, along with the growth rates over the corresponding month of the previous year including the cumulative indices are enclosed.

Release of the Index for January 2020 will be on Thursday, 12 March 2020.

12-May-2017: Revision of Base Year of All-India Index of Industrial Production from 2004-05 to 2011-12

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, revises the base year of the macroeconomic indicators, as a regular exercise, to capture structural changes in the economy and improve the quality and representativeness of the indices. In this direction, the base year of the all-India Index of Industrial Production (IIP) has also been revised from 2004-05 to 2011-12 to not only reflect the changes in the industrial sector but to also align it with the base year of other macroeconomic indicators like the Gross Domestic Product (GDP), Wholesale Price Index (WPI).

Revisions in the IIP are necessitated to maintain representativeness of the items and producing entities and also address issues relating to continuous flow of production data. In the past, such changes were effected at the time of a revision in the base year. With the release of the new series of IIP (base 2011-12), an institutional mechanism has been established for facilitating dynamic revision of the item list of products and the panel of factories, through a Technical Review Committee, chaired by Secretary, Ministry of Statistics & PI. This Committee will meet at least once a year for identifying new items that need to be included in the item basket and removing those that have lost its relevance in the industrial sector or are no longer being produced.

IIP in the revised series will continue to represent the Mining, Manufacturing and Electricity sectors. The revised series uses the National Industrial Classification (NIC) 2008 for the purpose of classification of industrial production.  The unit coverage of IIP will, as before, cover entities in the organized sector units registered under the Factories Act, 1948.

A detailed note on the changes introduced in the new series of IIP is at Annexure I. Highlights of the changes introduced are summarized below:

1. The selection of items in the new series has been done at the 3 digit level of NIC for better representation as compared to selection at 2 digit level done in 2004-05 series.

2. At the broad level, the new series has a total of 809 items occurring in the manufacturing sector in the item basket (405 item groups), where 149 new items like Steroids and hormonal preparations, Cement clinkers, Medical/ surgical accessories, Pre-fabricated concrete blocks, refined Palm Oil have been added and 124 items such as Biaxially Oriented Polypropylene (BOPP) Films, Calculators, Colour TV picture tubes, Gutka have been deleted from the 2004-05 series which had 620 items (397 item groups) in the manufacturing sector.

The sectoral composition of the IIP is as follows:

Sector	Base year 2011-12		Base year 2004-05
	Weights (%)	Item groups	Weights (%)	Item groups
Mining	14.373	1	14.157	1
Manufacturing	77.633	405	75.527	397
Electricity	7.994	1	10.316	1
Total	100	407	100	399

3. To reflect the increasing significance of electricity generation from renewable sources, it has been decided to include data on electricity generation figures from these sources in the new series. This inclusion is being done from April, 2014 onwards as monthly data for electricity generation from renewable sources for earlier months were not available.

4. For capital goods, data in the new series will now be captured in terms of ‘work in progress‘ to better represent the growth of capital goods and to avoid reporting of production figures in bulk after the completion of production. Details on this methodology are available in the Report of the Working Group set up for the revision of base year, which may be accessed in the official website of this Ministry.

5. The number of source agencies reporting data for compilation of IIP in the new series will be 14 as compared to 15 in the current series. This is on account of the fact that data on ‘Iodised Salt’ in the new series will be provided by the Department of Industrial Policy and Promotion (DIPP) as O/o Salt Commissioner is not in a position to supply Salt production data after abolition of Salt Cess Act, 1953 in Finance Bill 2016.

Based on the recommendations of the Working Group, the Use-Based Classification (UBC) has been re-framed by replacing “Basic Goods” with “Primary Goods” and introducing a new “Infrastructure/ Construction goods” category. The former change is to improve clarity on the movement of IIP of Primary Goods in industry and the latter aims to address the linkage of production with Infrastructure and Construction sector. A brief table giving the use based classification is given below:

In the Mining Sector the coverage has undergone a change on account of the MCDR Amendment Rules, 2016 resulting in 27 non-metallic minerals being designated as minor minerals and which are no longer monitored by Indian Bureau of Mines.

Use-Based Classification

New Series (base 2011-12)	Item groups	Weights (%)	Old Series (base 2004-05)	Item groups	Weights (%)
Primary goods	15	34.05	Basic Goods	88	45.68
Intermediate goods	110	17.22	Intermediate goods	106	15.69
Capital goods	67	8.22	Capital goods	73	8.83
Infrastructure/ construction goods	29	12.34	NA	--	--
Consumer durables	86	12.84	Consumer durables	43	8.46
Consumer nondurables	100	15.33	Consumer nondurables	89	21.34
TOTAL	407	100	TOTAL	399	100

NA – Not applicable

As in the 2004-05 series, the practice of using Wholesale Price Index (WPI) to deflate items for which data is reported in value terms will continue. However the number of items in the new series for which data will be captured in value terms will be 109 instead of 54 in the existing series. Wholesale Price Index (WPI) with base 2011-12 has been used for deflation.

Based on the monthly production figures provided by the source agencies from April 2011 till March 2017, the monthly indices and growth rates have been worked out. The monthly indices for the new series with base 2011-12 from April 2012 through March 2017 at the sectoral level are provided at Statement I. The monthly growth rates at the sectoral level for the IIP series with base 2011-12 vis-à-vis 2004-05 are provided at Statement II. The annual growth rates at the sectoral level for the IIP series with base 2011-12 vis-à-vis 2004-05 are provided at Statement III. The annual growth rates as per the re-framed Use-Based Categories are provided at Statement IV.

Detailed tables including indices at sectoral level, NIC 2 digit level and as per Use-Based Classification for the old and new series will be made available on the website of MoSPI at 5.30 PM on 12.05.2017.

User of the new IIP series (base 2011-12), while comparing with the old series may like to consider the following aspects:

1. The growth rates of the two series are not strictly comparable as the indices for 2011-12 have been normalized to 100 at a monthly level.
2. There has been an increase in number of factories in panel for reporting data and closed ones have been removed.
3. The item basket has been revised with inclusion of new items and exclusion of old ones.
4. The electricity sector now includes data from renewable energy sources.
5. The coverage of the mining sector has undergone a change.

Annual Growth Rates of IIP (%) as per Use Based Classification 

Use-Based Classification	Weights (%)	2012-13	2013-14	2014-15	2015-16	2016-17
Primary goods	34.05	0.5	2.3	3.8	5.0	4.9
Capital goods	8.22	0.4	-3.6	-0.8	2.1	1.9
Intermediate goods	17.22	5.1	4.5	6.2	1.5	3.0
Infrastructure/ construction goods	12.34	5.4	5.7	5.0	2.8	3.8
Consumer durables	12.84	5.0	5.7	4.0	4.2	6.2
Consumer non-durables	15.33	6.1	3.7	4.1	2.7	9.0

Changes introduced by CSO, MoSPI in the new series of Index of Industrial Production with base 2011-12

Item Basket Selection

1. Selection of items has been done at 3-digit level of NIC 2008 from the Annual Survey of Industries (ASI) data by ensuring that the selected items cover at least 80 percent of the output of each 3 digit group. In comparison, the items in 2004-05 series were selected at 2-digit level of NIC. The selection at more disaggregated level will make the index more representative.
2. By the above method, the items selected for new series of IIP with base 2011-12 comprised of 809 items, which were clubbed in 405 item groups pertaining to Manufacturing Sector. Mining and Electricity sectors will be represented by a single item index. In comparison, the 2004-05 series basket comprised of 620 items clubbed into 397 item groups for Manufacturing Sector and one item each for Mining and Electricity sectors. The item basket for the new series is placed at Appendix I.
3. The basket of Mining Sector will now comprise of 29 minerals (Appendix II) identified by the Indian Bureau of Mines (IBM) as opposed to 62 minerals in the Mining basket of 2004-05 series. The decline in number of items is on account of 27 non-metallic minerals in the existing basket being declared as minor minerals in the MCDR Amendment Rules, 2016.

Weighting diagram

1. Weights at the sectoral level for the new series of IIP have been computed using the sectoral Gross Value Added (GVA) figures from National Accounts Statistics with base 2011-12.
2. The sectoral weights have been distributed at 2, 3 and 4 digit levels of National Industrial Classification (NIC), 2008 using GVA figures from ASI 2011-12.
3. The weights at 4 digit level of NIC have been distributed at product level using value of output figures from ASI 2011-12.
4. In view of heavy subsidies involved in the industry group ‘Petroleum products’, it was decided to adjust the GVA from ASI with the actual subsidies provided by the Government of India to the manufacturers to offset the losses made by them while selling products at a price lower than the actual cost of production. The weights of other industries were appropriately readjusted.

Comparison of items and weights in the two series

Out of 407 item groups (including Mining and Electricity), 258 item groups are common with the existing basket, having a weight of approximately 84.6 percent (as per the new series with base 2011-12) while 124 item groups from existing basket comprising a weight of approximately 14.4 percent (as per the existing series with base 2004-05) are outdated/ obsolete and hence dropped (list of dropped items at Appendix III). The number of new items in the new series of IIP is 149 with a weight of approximately 15.4 percent.

Classification

National Industrial Classification (NIC)-2008 is being adopted in the new series instead of NIC-2004.

Source agencies

The monthly production data for the compilation of new series of IIP are now being made available to the CSO by fourteen (14) source agencies viz. (1) Indian Bureau of Mines (IBM), (2) Directorate of Sugar & Vegetable Oils, (3) Tea Board, (4) Coffee Board, (5) O/o the Textile Commissioner, (6) O/o the Jute Commissioner, (7) O/o the Coal Controller, (8) M/o Petroleum & Natural Gas, (9) Joint Plant Committee (Iron & Steel), (10) Railway Board, (11) D/o Industrial Policy & Promotion, (12) D/o Chemicals & Petrochemicals, (13) D/o Fertilizers and (14) Central Electricity Authority.

Work in progress

In the revised IIP basket, data for 109 item groups is being collected in value terms. Many of these item groups have production span of more than one month for which data will now be reported on ‘work in progress’ so that continuous production is accounted for and will address the fluctuations in production data. The value data reported for such items need to be deflated using an appropriate price deflator. The Wholesale Price Index (WPI) with base 2011-12 has been used for deflating value based items in the new series of IIP.

Frame of factories

1. The frame of factories was drawn from the results of 4 years of ASI to make it more representative and robust and was also duly augmented with frames maintained by source agencies of IIP, as and where applicable.
2. The frame of factories for D/o Industrial Policy & Promotion (DIPP) which is the most important source in terms of number of items as well as weights underwent a significant expansion in terms of coverage and robustness. The number of factories under DIPP’s purview in the new series will increase by about 1400 in the current series. The number of factories reporting data for each item (except 13 items) will be at least 4 thereby reducing chances of exhibiting abnormal volatility during currency of the series after its launch. The 13 items for which number of factories are less than 4 have been retained in consultation with DIPP in view of their emerging nature and contribution at the industry level.

Use-Based Classification

The Use-Based Classification has been re-framed to ensure better representativeness. There are two new categories introduced in the new series namely “Primary goods” and “Infrastructure/ Construction goods”. At the same time the category “Basic goods” has been removed. The re-framed Use-based classifications (UBCs) to be adopted in the new series are as follows:

1. Primary goods- consisting of Mining, Electricity, Fuels and Fertilizers. This category will replace the existing category ‘Basic goods’;
2. Capital goods- e.g. Machinery items;
3. Intermediate goods- e.g. yarns, chemicals, semi-finished steel items, etc.;
4. Infrastructure/ Construction goods - e.g. paints, cement, cables, bricks and tiles, rail materials, etc. This category has been constituted to categorize items which were neither part of Consumer durables nor Intermediate goods. This categorization assumes significance in wake of growing importance of infrastructure sector;
5. Consumer durables- e.g. garments, telephones, passenger vehicles, etc.; and
6. Consumer nondurables- e.g. food items, medicines, toiletries, etc.