India's industrial output, measured by the Index of Industrial Production (IIP), rose 3.1 per cent year-on-year in September, as against a contraction of 0.7 per cent in August, data released by the Ministry of Statistics & Programme Implementation (MoSPI) showed

The Index of Industrial Production (IIP) is an index for India which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.

The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period.

It is compiled and published monthly by the Central Statistical Office (CSO), Ministry of Statistics and Programme Implementation six weeks after the reference month ends.

The level of the Index of Industrial Production (IIP) is an abstract number, the magnitude of which represents the status of production in the industrial sector for a given period of time as compared to a reference period of time.

The base year was at one time fixed at 1993–94 so that year was assigned an index level of 100. The current base year is 2011-2012.

The Eight Core Industries comprise nearly 40.27% of the weight of items included in the Index of Industrial Production (IIP).

These are Electricity , steel, refinery products, crude oil, coal, cement, natural gas and fertilisers.

The first official attempt to compute the IIP was made much earlier than even the recommendations on the subject at the international level.

The Office of the Economic Advisor, Ministry of Commerce and Industry made the first attempt of compilation and release of IIP with base year 1937, covering 15 important industries, accounting for more than 90 percent of the total production of the selected industries.

The all-India IIP is being released as a monthly series since 1950. With the inception of the Central Statistical Organization in 1951, the responsibility for compilation and publication of IIP was vested with this office.

the base year of the all-India Index of Industrial Production (IIP) has also been revised from 2004-05 to 2011-12 to not only reflect the changes in the industrial sector but to also align it with the base year of other macroeconomic indicators like the Gross Domestic Product (GDP), Wholesale Price Index (WPI).

The sectoral composition of the IIP is as follows - Weights [Mining - 14.373, Manufacturing - 77.633, Electricity - 7.994] totalling 100%.

Use-Based Classification [Primary goods-34.05, Intermediate goods-17.22,Capital goods-8.22, Infrastructure/ construction goods-12.34, Consumer durables-12.84, Consumer nondurables-15.33]

The re-framed Use-based classifications (UBCs) to be adopted in the new series are as follows:

i. Primary goods- consisting of Mining, Electricity, Fuels and Fertilizers. This category will replace the existing category ‘Basic goods’;

ii. Capital goods- e.g. Machinery items;

iii. Intermediate goods- e.g. yarns, chemicals, semi-finished steel items, etc.;

iv. Infrastructure/ Construction goods - e.g. paints, cement, cables, bricks and tiles, rail materials, etc. This category has been constituted to categorize items which were neither part of Consumer durables nor Intermediate goods. This categorization assumes significance in wake of growing importance of infrastructure sector;

v. Consumer durables- e.g. garments, telephones, passenger vehicles, etc.; and

vi. Consumer nondurables- e.g. food items, medicines, toiletries, etc.

The basic data used for compilation of the index is the production in terms of quantity. However, there are certain items especially capital goods such as Machinery, Machine Tools, Ship Building etc. on which the production data is furnished in value terms.

In order to remove the effect of price rise from the index, the production figures of such items are deflated on the basis of Wholesale Price Indices (Base 2011-12), compiled by the Office of Economic Adviser, Ministry of Commerce and Industry, before compilation of index.

The Annual Survey of Industries (ASI) is conducted by the Ministry of Statistics & Programme Implementation every year for the organized manufacturing sector throughout the country. The ASI covers following industries:

 All the factories and industrial units registered under Sections 2m(i) and 2m(ii) of the Factories Act, 1948, employing 10 or more workers using power and 20 or more workers but not using power on any day of the preceding 12 months;

 Bidi and Cigar Manufacturing Establishments registered under the Bidi and Cigar Workers (Conditions of Employment) Act, 1966 employing 10 or more workers using power and employing 20 or more workers but not using power on any day of the preceding 12 months;

 Certain services and activities like Cold Storage, Water Supply, Repair of Motor Vehicles and Other Consumer Durables like watches, etc.

In India, the Index of Industrial Production is based on the responded production as well as estimated production for non-responding units. The production estimates for the non-responding units are developed using various methods including: repetition of last available data; taking the average production data for the last few months; using previous year’s growth rate

The weights for the three sectors (mining, manufacturing, and electricity) are based on share of the sector in total domestic production in the base year

Efforts would be made to revise the base year once in every five years as per UNSD's recommendations

Index of Industrial Production is only a short-term indicator, used till the detailed results of Annual Survey of Industries are available. Till the ASI results are available, the IIP figures are used in compilation of National Accounts and hence the GDP figures are in close alignment with the IIP