Economy ยท GS3
New-series Index of Industrial Production
One line
MoSPI issued the first Index of Industrial Production release using 2022-23 as the base year.
Summary
Rebasing updates the production basket and weights to better reflect the current economy. IIP is a high-frequency volume indicator, not a complete measure of industrial profitability or employment.
PYQ pattern
UPSC may test IIP alongside GDP, core industries, PMI, and price indices.
Core notes
- IIP tracks output in mining, manufacturing, and electricity.
- A new base year can add products, revise weights, and update data sources.
- Growth rates may differ across series because coverage and weights change.
- Users should not splice old and new index levels without an official linking method.
Prelims lens
- IIP measures production volume, not wholesale prices.
- MoSPI compiles the index.
- Base year is a statistical reference, not necessarily the year of publication.
MCQ 1
IIP covers:
- Mining.
- Manufacturing.
- Electricity.
- A. 1 only
- B. 1 and 2 only
- C. 2 and 3 only
- D. 1, 2 and 3
Reveal answerHide answer
D
All three broad sectors are included.
MCQ 2
Rebasing an index can involve:
- A. Updating weights and the product basket
- B. Ending all data revisions
- C. Replacing output data with price data
- D. Removing the reference period
Reveal answerHide answer
A
Rebasing aligns the index structure more closely with the current economy.
Mains
Question, 10 marks, 150 words: Why are periodic base-year revisions important for official economic indicators?
Approach:
- Explain structural change and weights.
- Use IIP as an example.
- Discuss comparability and back-series challenges.
- Recommend transparent methods and timely data.