index-of-eight-core-sector-industriessummary

Context: Recently, the Office of Economic Adviser within the Department for Promotion of Industry and Internal Trade released the Index of Eight Core Industries for September 2020.

More on the news: In terms of cumulative growth in the first half of the current financial year, Index of Eight Core Sector Industries has contracted by 14.9 percent.

About the Index of Core Industries:

  • It is an index of the eight most fundamental industrial sectors of the Indian economy and it maps the volume of production in these industries.
    • This means, if these eight industries are not growing fast enough, the rest of the economy is unlikely to either.
  • These eight sectors are Coal, Natural Gas, Crude Oil, Refinery Products (such as Petrol and Diesel), Fertilisers, Steel, Cement and Electricity.
  • The eight core industries comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).
  • The Base Year of the Index of Eight Core Industries has been revised from the year 2004-05 to 2011-12 from April, 2017.
  • The eight Core Industries in decreasing order of their weightage: 

Industry

Weight (In percentage)

Petroleum & Refinery production

28.04

Electricity generation

19.85

Steel production

17.92

Coal production

10.33

Crude Oil production

8.98

Natural Gas production

6.88

Cement production

5.37

Fertilizers production

2.63

What does the latest data signify?

  • Meagre growth last year (1.3 percent): This points to a sustained period of industrial growth in the Indian economy.
  • Covid-19 pandemic and associated lockdowns.
  • Positive sign: While the index in September contracted but the rate of contraction was less than 1 percent, which is far less than the rate of contraction in any of the past 6 months. 
  • Next wave of Covid-19 infections: If there is a surge in the winter months - as is being witnessed in most Europe and the US - then India’s recovery will be affected negatively yet again.

Index of Industrial Production(IIP):

  • It is an index which details out the growth of various sectors in an economy such as mineral mining, electricity,manufacturing, etc.
  • It is compiled and published monthly by the Central Statistical Organisation (CSO), Ministry of Statistics and Programme Implementation six weeks after the reference month ends.

Image Source: IE