The Index of Industrial Production (IIP) is a composite economic indicator that measures the short-term changes in the volume of production across India's industrial sector. It is an index, not an act or scheme, and serves as a crucial barometer for the health of the industrial economy.
The first official attempt to compute the IIP in India was made before international recommendations, with the base year 1937, covering 15 major industries. The all-India IIP has been released on a monthly basis since 1950, and the responsibility for its compilation and publication was transferred to the Central Statistical Organisation (CSO) in 1951. The IIP was created to provide a consistent, high-frequency measure of the country's industrial output, acting as a leading indicator for Gross Domestic Product (GDP) estimates and guiding fiscal and monetary policies.
The IIP is compiled and published monthly by the National Statistical Office (NSO), which is under the Ministry of Statistics and Programme Implementation (MoSPI). It is calculated using the Laspeyres index formula, which is a weighted arithmetic mean of production relatives, where the base year is assigned an index value of 100. The index is broadly classified into three sectors: Mining, Manufacturing, and Electricity. The Eight Core Industries—Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity—account for approximately 40.27% of the total weight of items in the index.
The IIP connects directly to the estimation of the Gross Value Added (GVA) of the manufacturing sector for quarterly GDP calculations and is used by institutions like the Reserve Bank of India (RBI) for policy formulation.
The IIP has undergone periodic revisions to reflect the changing structure of the economy. The base year was most recently revised from 2004-05 to 2011-12 in 2017. A significant change is currently underway: the base year is being revised from 2011-12 to 2022-23, with the new series planned for release on June 1, 2026. This revision includes adding 120 new item groups and sectors like rare earth minerals, gas supply, and water supply, while removing outdated items like typewriters and black and white televisions. The core concept of measuring the volume of industrial production remains the same, but the basket of products and their weights are updated to better capture modern industrial activity.