IIP stands for Index of Industrial Production. As true with any index, IIP Data or IIP Number is a measurement which represents the status of production in the industrial sector for a given period of time compared to a reference or earlier period of time. IIP index is one of the key tool to measure the level of industrial activity in Indian economy. Strictly speaking the IIP is a short term indicator measuring industrial growth till the actual result of detailed industrial surveys become available from Annual Survey of Industries (ASI) is published. IIP data is a very important indicator to the Government for planning purposes and is also used by various organisations like Industrial Associations, Research Institutes, Financial Institues and Academicians. Stock markets in India also react very seriously to this number.
Publication of IIP Data
IIP numbers of a particular month would be published after two months. The date of publishing IIP numbers are usually before noon on the 12th of a month. The dates are indicative based on the previous publishing dates, it can be anywhere between 11th to 14th of a month.
The IIP index is computed using the weighted arithmetic mean of quantity relatives with weights being allotted to various items in proportion to value added by manufacture in the base year by using Laspeyre’s formula:
IIP = ? (WiRi)/ ? Wi.
Where Ri is the production relative of the ith item for the month in question and Wi is the weight allotted to it.
Components (Items) and Weightage
There IIP constituent has undergone several change since its inception. The latest series with 1993-94 as the base year containing 543 items (with the addition of 3 items for mining sector and 188 for the manufacturing sector) has come into existence on 27 May 1998.