News Highlight
India’s eight Core sector output growth moderated to 12.7% in June, from 18.1% in May.
Key news takeaways:
- The growth of eight core infrastructure sectors rose by 12.7% in June, compared with 9.4% in the year-ago period.
- Barring crude oil production, all other sectors showed positive growth.
- Coal production increased 31.1 per cent in June 2022 over June 2021.
- Crude oil production declined by 1.7 per cent in June 2022 compared to June 2021.
- Natural gas production increased 1.2 per cent in June 2022 over June 2021.
- Petroleum refinery production increased 15.1 per cent in June 2022 over June 2021.
- Fertiliser production increased 8.2 per cent in June 2022 over June 2021.
- Steel production rose 3.3 per cent in June 2022 over June 2021.
- Cement production jumped 19.4 per cent in June 2022 over June 2021.
- Electricity generation saw a rise of 15.5 per cent in June 2022 over June 2021.
The Index of Eight Core Industries.
- The Index of eight core industries (ICI) is prepared every month by the Department for Promotion of Industry and Internal Trade (DPIIT), and the Ministry of Commerce and Industry.
- ICI measures the combined and individual performance of products in eight core industries. They are,
- Coal
- Crude Oil
- Natural Gas
- Refinery Products
- Fertilisers
- Steel
- Cement,
- Electricity.
- The eight core industries, in decreasing order of their weightage, are Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilisers.
- The Eight Core Industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP).
| Industry | Weight |
| Refinery products | 28.04 |
| Electricity | 19.85 |
| Steel | 17.92 |
| Coal | 10.33 |
| Crude oil | 8.98 |
| Natural gas | 6.88 |
| Cement | 5.37 |
| Fertilisers | 2.63 |
| TOTAL | 100 |
Index of Industrial Production (IIP).
- The IIP is an indicator that tracks changes in the volume of industrial product output over a specific period.
- It is 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 it.
- Broad sectors, namely, mining, manufacturing, and electricity.
- Use-based sectors, namely basic goods, capital goods, and intermediate goods.
- The base year for IIP is 2011-2012.
Importance of the core industries in the Indian economy
- Used as a tool to evaluate economic performance.
- Normally, economic activity picks up when the core sector numbers pick up.
- sectors like cement, steel and electricity are strong lead indicators for a revival in economic growth.
- Evaluating the performance of the core industries would help to understand the economic situation.
- Help with policy formulation
- Government can formulate policies and programmes based on the status of core industries.
- For example, during the COVID pandemic, the government introduced the Production Linked Incentive or PLI. The scheme aims to give companies incentives for incremental sales from products manufactured in domestic units.
- The backbone of other industries
- The core industries are so-called as they are considered the backbone of all other industries. The core sectors have a significant impact on the economy and impact most other industries as well.
- They provide more employment to the public and revenue generation to the government.
- Revenue estimation
- The government can estimate its revenue based on the performance of the core industries.
- That helps to anticipate revenue and expenses for the future.
Content Source: The Hindu