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A technical advisory group of the Reserve Bank of India (RBI) suggested using quarterly gross domestic product (GDP) and monthly index of industrial production (IIP) data to track economic growth. RBI set up Technical Advisory Group on "Development of Leading Economic Indicators for Indian Economy" in March 2006. This was in view of the need to frequently watch the movements of the Indian economy based on suitable method and international best practices.
How IIP Data is formed?
IIP data is a simple index which provides information about the growth of different sectors of our economy like mining, electricity, Manufacturing & General. The IIP index reflects the growth in India’s industrial activity and excludes all kinds of services. The base year for the index over the period of the analysis is 1993-94.
Use-Based Classification
Another classification is use-based (consumption based), where IIP is classified on the base of use like Basic Goods, Capital goods, Intermediate goods & consumer goods.
Sectors in IIP Data
The weightage of Indian IIP data is broadly divided into three segments – manufacturing (79.36%), mining & quarrying (10.47%) and electricity (10.17%)...
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