What is not included in the Index of Industrial Production (IIP), which is the measure of Industrial activities in the Indian Economy?
- (1)Gas and water supply
- (2)Electricity
- (3)Manufacturing
- (4)Mining
Answer
Why
Correct — option (1), Gas and water supply.
The Index of Industrial Production (IIP) has three sectors: mining, manufacturing and electricity. The Ministry of Statistics and Programme Implementation's press release of 12 October 2021, for August 2021 (base 2011-12=100), gives an index for each of the three and a general index built from them.
Their weights in the general index of 100 are Mining 14.372472, Manufacturing 77.63321 and Electricity 7.994318. Gas and water supply is not one of the sectors.
For August 2021 the Quick Estimates stood at 103.8 for mining, 130.2 for manufacturing and 188.7 for electricity, with the general index at 131.1.
IIP = Mining + Manufacturing + Electricity.
Why the others are wrong
- (2)Electricity — Electricity is included. It is one of the IIP's three sectors, with a weight of 7.994318, the smallest of the three.
In the release for August 2021 its index was 188.7, the highest of the three sectors that month. A small weight does not mean the sector is left out.
- (3)Manufacturing — Manufacturing is included, and it carries most of the weight: 77.63321 out of 100.
The release breaks it into 23 industry groups at the 2-digit level of the National Industrial Classification 2008, from food products (code 10) to other manufacturing (code 32). Basic metals carry the largest group weight, 12.8043.
- (4)Mining — Mining is included. It is the IIP's second-largest sector, with a weight of 14.372472.
Its Quick Estimate for August 2021 was 103.8. With manufacturing and electricity, it makes up the whole of the general index.
Concept
The IIP tracks industrial production against a base year; the series in use in 2021 has 2011-12=100. It is compiled from data that source agencies collect from producing factories and establishments.
The National Statistical Office releases Quick Estimates on the 12th of every month, or the previous working day, with a six-week lag, and revises them in later months. MoSPI's Annual Report 2019-20 says data come from 14 source agencies, with DPIIT supplying 322 of 407 item groups, weighing 47.54% of the index.
The same data are also grouped by use: primary, capital, intermediate and infrastructure/construction goods, and consumer durables and non-durables.
RPSC's 2021 Prelims syllabus lists "Major Sectors of Economy: - Current Status, Issues & Initiatives of Agriculture, Industry, Service and Trade sectors" under Economic Development & Planning. The IIP is a monthly measure of that sector's output.
Other official statistics draw the industrial boundary differently. MoSPI's Annual Report 2019-20 describes the Annual Survey of Industries as covering manufacturing along with the generation and transmission of electricity, gas and water supply, and cold storage.
Income accounts also group utilities together. Rajasthan's Economic Review 2020-21 reports the State's GSVA for electricity, gas, water supply & other utility services as a single sector, beside mining, manufacturing and construction.
Key facts
- MoSPI press release, 12 October 2021: the IIP for August 2021 (base 2011-12=100) was 131.1; Mining 103.8, Manufacturing 130.2, Electricity 188.7.
- IIP sector weights: Mining 14.372472, Manufacturing 77.63321 and Electricity 7.994318, out of 100.
- IIP Quick Estimates are released on the 12th of every month, or the previous working day, with a six-week lag.
- MoSPI Annual Report 2019-20: DPIIT supplies data for 322 of the IIP's 407 item groups, with a combined weight of 47.54%.
- The IIP's use-based groups are primary, capital, intermediate and infrastructure/construction goods, consumer durables and consumer non-durables.
The three weights add up to the general index of 100. Weights from MoSPI's IIP press release of 12 October 2021.
Study next
Common traps
- Carrying over the income-accounts grouping. Rajasthan's Economic Review 2020-21 puts electricity, gas, water supply and other utility services in one GSVA sector, but the IIP's third sector is electricity alone.
- Reading a small weight as exclusion. Electricity has the smallest weight, 7.994318, but it is still one of the three sectors.
- Mixing the IIP with the Annual Survey of Industries. MoSPI describes the ASI's coverage as including gas and water supply; the IIP's three sectors do not.
A question can ask which sector is not part of the IIP, as this one does.
A question can also ask the base year of the current series, the sector with the largest weight, the use-based groups, or which body releases the index.
Related PYQs
UnlockIAS compared this question with questions from other RAS Prelims papers and found none similar enough to link.
Practice
- practice — not a real PYQ
Which sector has the largest weight in India's Index of Industrial Production (base 2011-12)?
- (a)Mining
- (b)Manufacturing
- (c)Electricity
- (d)Construction
Answer(2) — Manufacturing's weight is 77.63321 out of 100. Option (1), Mining, has 14.372472; option (3), Electricity, 7.994318; option (4), Construction, is not one of the IIP's sectors (infrastructure/construction goods is a use-based group, a different classification). - practice — not a real PYQ
The Index of Industrial Production released by MoSPI in 2021 uses which base year?
- (a)2004-05
- (b)2011-12
- (c)2015-16
- (d)1993-94
Answer(2) — MoSPI's release of 12 October 2021 is headed Base 2011-12=100. Option (1), 2004-05, is the base of the series that MoSPI's 2011-12 revision replaced; option (3), 2015-16, and option (4), 1993-94, are not the base used in that release.