Recent Trends in Index of Industrial Production (IIP)

Why in News?
Industrial output, as measured by the Index of Industrial Production, grew 4.9% in April 2026, slower than 5.8% in the same period last year, according to the new IIP series released recently.

• Index of Industrial Production (IIP) - It is a key economic indicator that measures the short-term changes in the volume of physical production in Indian industries.
• Published by - The National Statistical Office (NSO) monthly under the Ministry of Statistics and Program Implementation (MoSPI).
• The IIP also incorporates data from 8 core industries (Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity), which make up over 40% of the total IIP weight.

Architectural & Structural Changes in the New IIP Series Base Year Revision

• Base year Revision - Shifted from 2011–12 to 2022–23 (index baseline set at 100), aligning it with the newly updated Gross Value Added (GVA) and GDP series.
• Expanded Basket Size - The commodity basket has been expanded to 1,042 products (mapped to 463 item groups), up from 839 products in the older series.
• Broadened Sectoral Coverage- Expanded from 3 traditional sectors to 4 sectoral indices by incorporating a new composite division.
  • New Divisions - Gas supply, water supply, sewerage & waste management activities alongside Mining, Manufacturing, and Electricity.
• Improved Data Granularity - Mining Sector - Sub-classified into fuel, metallic (including rare earth minerals), and non-metallic (including minor) minerals.
• Electricity Sector- Segmented explicitly into renewable and non-renewable energy sources.
• Data Continuity - A linking formula has been introduced to allow users to compare the old and new data series seamlessly.
• Sectoral Performance Analysis (April 2026 Data) Sectoral Division Weight / Share in Basket April 2026 Performance (YoY).

Key Manufacturing Sub-sector Drivers

• Top Growth - Electrical Equipment industry surged by 19.2%.
• Key Contractions - Wood products (-12.5%), Wearing Apparel (-7%), and Coke & Refined Petroleum Products (-0.4%).

Use-Based Classification Trends (April 2026)

• The IIP divides industries into 6 functional categories.
• Growth Quickened / Accelerated (Positive Economic Signals)
  • Capital Goods - Rocketed to 16% growth, signaling strong long-term private sector investment and capacity expansion.
  • Infrastructure / Construction Goods - Quickened to 7.1%, reflecting sustained government capital expenditure on infrastructure.
  • Intermediate Goods - Grew faster at 7.7% (up by 0.19 percentage points YoY), indicating healthy supply-chain inputs.
• Growth Decelerated / Slowed (Consumptive Red Flags)
  • Primary Goods - Slumped to 0.8% growth.
  • Consumer Durables - Slowed down to 4.3% growth.
  • Consumer Non-Durables - Slowed down to 2.8% growth, signaling muted rural and urban FMCG consumption demand.

Reference

The Hindu | Index of Industrial Production