brief description about iip

1. INDEX OF INDUSTRIAL
PRODUCTION(IIP)
PRESENTED BY:
VINEETH NADH
VISHNU ANIL
VISHNU K
VIPIN E K

2. INTRODUCTION
Definition of IIP:
 IIP is a number which tells about how
industries are performing over a
period of time
 Calculated by Center for Statistical
Operations (CSO)
 Commenced in 1937
 Recently revised in 2004-2005
 It is the leading indicator of economic
growth

3. CALCULATION OF IIP
It is calculated using LASPEYERS
formula
IIP = ∑ ( W1 * R1 )
∑ W1
Where,
R1 = P1 X 100
P0
W1 = Base year weights
P1 = Production in current year
P0 = Production in base year

5. Contd..
CSO gets data from
 Manufacturing : Dept. of Industrial
Policy & Promotion
 Electricity : Central Electric Authority
 Mining : Indian Bureau of Mining (
Nagpur )

6. PROBLEMS WITH IIP
LASPEYERS formula have following
draw backs
 Subsequent change in weights is not
accounted
 Change in quality of goods is not
considered
 Addition of new goods is not
accounted till the next revision
 Substitution effect is not considered

7. PROBLEMS WITH IIP(contd..)
Data collection Problem :
 Data from unorganized sectors is
difficult to obtain
 No standardized data collection &
production techniques

8. CONCLUSION
 Low IIP values have direct effect on
stock prices
 Lower employment
 Fundamentally strong stocks becomes
undervalued
 FIIs starts pulling out money from
Indian stock-market
 Rupee depreciates with respect to
USD

9. CONCLUSION(contd..)
 Growth in IIP numbers are good signs
for cement and steel industries
 Have a positive impact on the banking
sector
 Lower supply coupled with lower
demand can have catastrophic impact
on stock market and is one of the
main reasons for drop in Sensex.

10. THANK YOU..