Mains level : Present issues in Industrial Production
The latest index of industrial production (IIP) estimates from the NSO show that output shrank by 4.3% in September, with all three component sectors in the index — manufacturing, mining and electricity — posting contractions
What is the Index of Industrial Production?
It is an index for India which details out the growth of various sectors in an economy such as mineral mining, electricity and manufacturing.
The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period which presently in India is 2011-12.
It is compiled and published monthly by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation.
What are the present issues?
Consumer durables also posted a fourth straight contraction, with the 9.9% decline appearing in stark contrast to September 2018’s 5.4% growth.
17 of the 23 industry groups that comprise the manufacturing sector contracted.
Motor vehicles industry posted a 25% contraction.
Manufacturing having a weight of almost 78% in the IIP, the latest report from IHS Markit gives little room for optimism. The survey based Purchasing Managers’ Index revealed continuing manufacturing sector weakness in October as weakening demand hurt new orders and business sentiment
What are the reasons for the dip?
Low rural demand
Low investors’ confidence
What are the measures taken in this regard?
The Centre’s announcement of a funding initiative to help stalled housing projects ought to provide some fillip in the coming months.
Thus it is opined that the demand needs to be increased by the help of structural reforms while the Central Bank needs to lower interest rates for the revival in the time being.