INDEX FOR INDUSTRIAL PRODUCTION : Index which measures volume changes. Provides measurement free of Price changes. Composite indicator that measures the short-term changes in theproduction of a basket of industrial goods. Government of India’s Central Statistics Office (CSO) compiles and publishesthe IIP The all-India IIP was first released by the Office of Economic Adviser underthe Ministry of Commerce and Industry with 1937 as the base year.
COMPONENTS: IIP MANUFACTURING MINING ELECTRICITY INDUSTRY USER BASED GOODS GOODS CAPITAL INTERMEDIATE CONSUMER BASIC GOODS GOODS GOODS GOODS DURABLE NON-DURABLE
CURRENT BASE YEAR – 2004-2005• Comprises of 682 items.• Broader (includes technologically advanced goods.• Eg: cell phones and i-pods.• Previous BY 93-94 was not usable.•Exclusion of Unregistered Manufacturing Firms.
Importance• Key indicator of GDP• As a Job Seeker• As a Stock Investor• As a Shopper• As a Borrower• As a Producer/Exporter
REASONS FOR DECREASING IIP GROWTH RATE :• TRADING PARTNERS• EXPORTS & IMPORTS• UNEVEN CREDIT FLOW• FALL IN REAL GDP• MONETARY POLICY OF GOVERNMENT• SLUMP IN STOCK MARKET• INVESTMENT DEMAND
INFLATIONUNEMPLOYMENT IIP INTERST RATE GDP GROWTH
PROBABLE FORECAST:• CONTRACTION OF DEMAND – DOMESTIC & GLOBAL• IIP TO GO BELOW 6%