Brief explanation on IIP Numbers OR What is IIP-Index Of Industrial Production?

Brief explanation on IIP Numbers OR What is IIP-Index Of Industrial Production?

Economic data are very important tool that investors and traders alike remain in alert to put down their strategies in the market. As you know the rate of interest, the rate of inflation, then GDP growth rate are most sought after top figures or statistics. Among these top 5 statistics figures the IIP or Index of Industrial Production is another data point that investors and traders keep close watch and economic forecasters rely while estimating various economic consequences.

·         First of all the IIP number is declared every month. Different countries have different schedule for collection and releasing and comparing such data.
·         This number is declared with a delay of 6 weeks i.e. today’s IIP is declared for 1 month in the past.
·         The IIP number is in percentage i.e. it shows the % change in the Index of IP relative to its level in same month in previous year i.e. y-o-y change.

·         The base year for construction/calculation of IIP is 2004-05, i.e. the figures were started to get compared with that year’s numbers. This base year is changed once in several years due to structural changes in the economic balance sheet.
·         The IIP is as you know now, a basket of products. Like we have 30 stocks that constitutes the BSE Sensex Index, there were 543 products in 1993-94 in IIP which was changed to 682 in 2004-05. These products are further divided into subheads based on the end use of them. These are basic goods, capital goods, intermediate goods, consumer durables and consumer non-durables.
·         The Central Statistics Office releases this data for the reference month. http://mospi.nic.in/Mospi_New/site/home.aspx

So, don’t get confused now when you hear the next IIP numbers release. 

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