Context

Industrial growth slowed in February to 0.1% from 1.44% in January, driven by an across-the-board slowdown, especially in key sectors like manufacturing, mining, capital goods, and infrastructure.

About

What is IIP?

• IIP is an index which shows the growth rates in different industry groups of the economy in a stipulated period of time.
• It is computed and published by the Central Statistical Office (CSO) on monthly basis.
• It measures the growth rate of industry groups classified under:
  • Broad sectors: Mining, Manufacturing and Electricity
  • Use-based sectors: Basic Goods, Capital Goods and Intermediate Goods.
• Currently, the base year has been shifted to 2011-12 from 2004-05.

Other findings of the report:

• The mining and quarrying sector saw growth slowing to 2% in February from 3.92% in January.
• The manufacturing sector saw a contraction of 0.31% from 1.05% in the same period.
• Growth in the infrastructure sector slowed to 2.38% from 6.8%.
• The electricity sector was the sector that saw an acceleration in growth, coming in at 1.18% in February compared with a growth of 0.94% in January.
• The consumer non-durables sector also saw growth quickening, to 4.3% from 3.33% over the same period.
• This declination of index caused slowing down of the economy, which was reflected in the quarterly GDP data.

What are the steps taken by government to improve the index?

• On the monetary side, steps have been taken through two successive rate cuts by the Reserve Bank of India each time by 25 basis points.
• On the fiscal side, however, the prospects were limited because both direct and indirect tax revenue collections have shown a shortfall compared to the revised estimates. So, in order to meet the 3.4% fiscal deficit target, it appears the government has gone in for curtailing expenditure in general, and capital expenditure in specific.
  
  

  Central Statistical Office (CSO) It is an office under the Ministry of Statistics and Programme Implementation (MoSPI). It coordinates the statistical activities in the country and evolves statistical standards. It has the following 5 divisions: National Accounts Division (NAD): This Division is responsible for the preparation of national accounts, which includes Gross Domestic Product, Government and Private Final Consumption Expenditure, Fixed Capital Formation and other macro-economic aggregates. Social Statistics Division (SSD): This Division is entrusted with Statistical monitoring of the Millennium Development Goals, Environmental Economic Accounting and Grant-in-aid for research. Economic Statistics Division (ESD): This Division conducts Economic Censuses, compiles All India Index of Industrial Production(IIP), Energy Statistics and Infrastructure Statistics. Training Division: This Division is primarily responsible for the training manpower in theoretical and applied statistics to tackle the emerging challenges of data collection, collation, analysis and dissemination required for evidence based policy making as also for planning, monitoring and evaluation. Coordination and Publications Division (CAP): The Division looks after co-ordination work within CSO as well as with the line Ministries and State Governments in statistical matters, organizes Conference of Central and State Statistical Organizations and ‘Statistics Day’ every year.