Context: Factory output contracted by a record 16.7 per cent in March as the impact of the nationwide lockdown to counter the COVID-19 pandemic reflected in sharp contraction of manufacturing, capital goods, consumer durables and consumer non-durables output.

More about the news:

  • For the full financial year 2019-20, the Index of Industrial Production (IIP) recorded a contraction of 0.7 per cent as against 3.8 per cent growth in the previous year.
  • The data is likely to be revised due to lower response rate from the units from which data is collected, the National Statistical Office said.

Salient features of the data:

  • Manufacturing sector output contracted 20.6 per cent compared to a growth of 3.1 per cent in the same month a year ago. 
  • Electricity generation declined by 6.8 percent as against a growth of 2.2 per cent in March 2019. 
  • Mining sector output remained flat compared to a growth of 0.8 per cent earlier. 
  • Production of capital goods, an indicator of investment, declined by 35.6 per cent as against a contraction of 9.1 per cent in the same month last year.
  • As per use-based classification, primary goods registered a contraction of 3.1 per cent, intermediate goods (-)18.5 per cent and infrastructure/construction goods (-)23.8 per cent this March over the same period last year.
  • The consumer durables output fell 33.1 per cent, while non-durables production slipped 16.2 per cent in March.


Category of Goods

  • Primary products are goods that are available from cultivating raw materials without a manufacturing process. Significant primary product industries include agriculture, fishing, mining, and forestry.
  • Capital goods are goods used by one business to help another business produce consumer goods.Capital goods include items like buildings, machinery, and tools.
  • Consumer goods are used by consumers and have no future productive use. Examples of consumer goods include food, appliances, clothing, and automobiles.
  • An intermediate good is a product used to produce a final good or finished product—also referred to as a consumer good. 
    • Intermediate goods—like salt—can also be finished products, since it is consumed directly by consumers and used by producers to manufacture other food products.J
  • Reasons behind the fall in IIP: It is due to a 
    • Pause in investment intentions 
    • Deferral of non-essential consumption 
    • Mismatches in labour availability 
    • The possibility of supply chain disruptions
  • GDP predictions: ICRA projects Indian GDP to contract in a range of 16-20 per cent in Q1FY2021, which would translate to a contraction of 1.0-2.0 percent in FY2021.
  • Silver lining: Economists expect the healthy rabi crop and a pickup in government expenditure to provide some cushion to economic activity in Q1 FY2021. 

Index of Industrial Production


  • IIP is an index that shows the growth of the manufacturing industry in different sectors of the economy.
    • The IIP reviews the industrial production for the period of a month.

Base Year

  • The base year for IIP is 2011-2012.


  • The constituents of IIP fall in three broad sectors , i.e. Mining, manufacturing, and electricity.


Number of Item Groups

Weight (%)










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

Compiling Agency

  • It is compiled and published by the Central Statistical Organization (CSO), which falls under the purview of the Ministry of Statistics and Programme Implementation.

Utility of IIP Data

  • The IIP data is used by the Ministry of Finance, the Reserve Bank of India (RBI), private firms and analysts, for the purpose of analysis.
    • It also finds utility in compilation of Gross Value Added (GVA) of the manufacturing sector in the Gross Domestic Product (GDP).