Index of Industrial Production
A monthly index measuring the volume of output in mining, manufacturing and electricity.
Formula
IIP = weighted average of production indices for mining, manufacturing and electricity, against a base year
Unit
index points
In depth
IIP measures volume rather than value, so it is unaffected by price changes and is a cleaner read on physical activity than nominal output figures. It covers only industry, which is under a third of Indian GDP, so it says nothing directly about services or agriculture. The monthly series is volatile and heavily affected by the base — a weak month a year ago produces a strong reading now — so the trend over several months is the useful signal. Its use-based classification into capital goods, consumer durables and non-durables is the more informative cut, since capital goods output indicates investment intent.
Worked example
IIP growth of 11.2% in a month where the year-earlier figure had contracted 4% is mostly a base effect. Against the level two years earlier, the compound growth might be under 3%.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Index of Industrial Production” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.