The Index of Industrial Production (IIP) compares the growth in the general level of industrial activity in the economy with reference to a comparable base year. In order to capture the structural changes in the industrial sector, the base year of the all-India IIP which was commenced in India in 1937 was revised in 1946, 1951, 1956, 1960, 1970, 1980-81 and 1993-94. The IIP numbers are released every month in India. The year 1993-94 is considered as the base year for comparison.

IIP is simply an index which details out the growth of various sectors in an economy. The first official attempt to compute and release the Index of Industrial Production was made by Office of Economic Advisor, Ministry of Commerce and Industry. The base year opted is 1937,around fifteen various kinds of industries are listed under this base year which then accounted for more than 90% of the total production of the selected industries.

As per Statistical Organization’s recommendation, the general scope of IIP includes mining, manufacturing, construction, electricity and gas sectors. However, In India general index of industrial production included mining, manufacturing, and electricity sectors only. Construction and gas sector are excluded due to constraints in data availability.

The quick estimates of IIP are compiled on the basis of data furnished by the source agencies located in the various departments of the government of India. Every country has their own IIP details which assigns as a balance sheet of the financial assets and liabilities. Thus IIP provides the data that are useful to compare whether it is a positive growth or a negative growth for a particular industry. (Comparing the values with a particular month with the same month in the previous year).

Due to the financial crisis, in the previous year sensex had down on each day; the investors were more concentrated towards manufacturing industry. Due to this reason the manufacturing sector has a high IIP value this year, this constitute almost 80% of the whole index. As compared with other manufacturing industries wood and wood products grown by32% and 26% respectively. The last few months recorded IIP value shows that the economy is on recovery path. The recovery will surely give strength for the economy.

Growth rate of different industries in the current financial year (2009 august):

Mining-12.9%

Manufacturing-10.2%

Electricity-10.6%

Capital goods production-8.5%

Basic goods production-10%

Consumer goods production-8.3%

Industrial goods production-14.2%

Consumer durables-22.3%

Most financial analyst and economist are planning to raise their fore cast on IIP for better figures in the coming months and they should expect a projected growth rate.

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