Context:
Industrial growth slows to 3.8% in Jan manufacturing decelerates.
More on the news:
- In January 2024, industrial growth decelerated with the headline number, measured by the Index of Industrial Production (IIP), slipping to 3.8 percent from 4.2 percent in December.
- According to data from the National Statistical Office (NSO), the output growth of the manufacturing sector slowed to 3.2 percent in January compared to 4.5 percent in December, Mining expanded by 5.9%, and electricity production increased by 5.6%.
- Within 23 manufacturing sectors, Computer Electronics and optics products witnessed the steepest fall of 11.9%
- Manufacturing, which constitutes about 15 percent of Gross Value Added (GVA), is recognized as a major job creator and significantly influences overall indirect tax collection.
- The easing of industrial growth to 3.8 percent in January was primarily attributed to a slowdown in manufacturing and reduced public capital expenditure.
- Despite the slowdown, factory output in January remained 14.0 percent higher than the pre-COVID level.
IIP (Index of Industrial Production)
- It represents a crucial benchmark for evaluating economic progress, providing insights into the changing patterns of Industrial Production over time relative to a chosen base year. This index illustrates the proportional shifts in physical output across various industries during a specified period compared to the preceding year.
- Published monthly by the Central Statistical Organization (CSO) under the Ministry of Statistics and Programme Implementation (MoSPI).
- India’s IIP series currently employs 2011-12 as its base year.
Eight core Industries
- The Index of Eight Core Industries evaluates the combined and individual production performance of selected core industries.
- The eight Core Industries in decreasing order of their weightage: Refinery Products (28.04%)> Electricity (19.85%)> Steel (17.92)> Coal (10.33%)> Crude Oil (8.98)> Natural gas(6.88%)> Cement(5.37%)> Fertilizers(2.63%). The Eight Core Industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
- The primary aim of this index is to offer an early indication of production trends in core industries prior to the release of the IIP by the Central Statistics Office. These industries are expected to influence both overall economic activities and industrial operations.
- Compiled and published by the Office of the Economic Adviser (OEA) under the Department for Promotion of Industry and Internal Trade, Ministry of Commerce & Industry, Government of India
Gross Value Added (GVA)
- GVA of a sector, as defined by the RBI, denotes the output value minus the intermediary inputs, encompassing raw materials and other goods and services consumed in production processes.
- This resultant “value added” is allocated among the primary factors of production, including labour and capital. Assessing GVA growth enables the identification of sectors prospering and those encountering difficulties within the economy.
- At the macroeconomic level, GVA encompasses a nation’s GDP along with subsidies and taxes adjusted within the economy, following national accounting standards.
- Gross Value Added = GDP + subsidies – taxes