June core sector growth slows to 4%

Context:

➢Growth in India’s core sector slipped to a 20 months low of 4% injunefrom 6.4% inmay.

➢Most sectors except coal recorded a sharp decline in output growth

➢Coal output grew by14.8%(fastest in eight months).

Index of Industrial Production:

➢IIP is an indicator that measures thechanges in the volume of production of industrial productsduring a given period.

➢Compiled and published monthly by:The National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.

➢It is a composite indicator that measures the growth rate of industry groups classified under:

oBroad sectors, namely, Mining, Manufacturing, and Electricity.

oUse-based sectors, namely Basic Goods, Capital Goods, and Intermediate Goods.

➢Base Year for IIP is2011-2012.

Significance:

➢It is used by government agencies including the Ministry of Finance, the Reserve Bank of India,etc,for policy-making purposes.

➢IIP remains extremely relevant for thecalculation of the quarterly and advance GDP(Gross Domestic Product) estimates.

IndexOfEight Core Industries

➢In India there are eight core sectors comprising coal, crude oil, natural gas, petroleum refinery products,fertilisers, steel, cement and electricity

➢These eight core industriesconstitute 40.27% of the total index of industrial production (IIP).

➢This index is prepared by theOffice of the Economic Advisor, Ministry of Commerce and Industryand is published monthly with thebase year as 2011-12.

Weightage of different sectors in the Index:

Highest Weightage:Refinery products.

Lowest Weightage:Fertilisers.

Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilizers.

Note: It is noted that Index of Industrial production (IIP) is published by CSO, Ministry of Statistics and Program implementation while Index of Eight core Industries is published by Office of Economic Advisor, Ministry of Commerce and Industry.

➢The decline in core sector growth duringjunecould possibly be attributed tolower spending on the government CAPEXbefore the General Elections and theslowdown in constructionactivity which has led to atemporary slack in demand for steel and cement.

India ratingsupgraded India’s FY25 GDP growth projections to 7.5% on budget from an earlier estimate of 7.1% .