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Index of Eight Core Industries

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The monthly Index of Eight Core Industries (ICI) is a production volume index [1]. The objective of the ICI is to provide an advance indication on production performance of industries of ‘core’ nature before the release of Index of Industrial Production (IIP) by Central Statistics Office. These industries are likely to impact on general economic activities as well as industrial activities.

ICI measures collective and individual performance of production in selected eight core industries viz. Coal, Crude Oil, Natural Gas, Petroleum Refinery Products, Fertilizers, Steel, Cement and Electricity. Components covered in these eight industries for the purpose of compilation of index are as follows:

The Index is compiled and released by Office of the Economic Adviser (OEA), Department of Industrial Policy & Promotion (DIPP), Ministry of Commerce & Industry, Government of India.

 

History & origin

Among the industries that go into the IIP basket, in order to provide an indication of how the industries whose production performance was ‘core’ in nature (because of their likely impact on general economic activity as well as other industrial activity) are performing, the exercise of bringing out an Index of Core Industries was initiated in the Office of the Economic Adviser, with six industries, viz. Coal, Cement, Electricity, Crude Oil, Refinery products, and Steel. 

The Index of Six Core industries had a combined weight of 26.7 per cent in the earlier series of the IIP with base year 1993-94. When the base year for IIP was revised to 2004-05, the base year for the Index of Core Industries was also revised to 2004-05, along with a revised weighting diagram. In the new series, two new additions, i. e. of Natural Gas and Fertilizers were made to make it an Index of Eight Core Industries accounting for 37.9 percent weight in the Index of Industrial Production (IIP). This Index is available since 2007-08 and is available in the Official Website of the OEA.

 

Coverage and Scope of ICI

The Eight Core Index broadly has a combined weight of 37.90 % in the Index of Industrial Production (IIP) and is published about 12 days prior to IIP. The weights of respective industries in IIP are - Coal 4.38 %, Crude Oil production 5.22 %, Natural Gas 1.71 %, Petroleum Refinery 5.94 %, Fertilizers 1.25 %, Steel 6.68 %, Cement production 2.41 % and Electricity generation 10.32 %.

After the base revision to 2011, the Eight Core Industries comprise 40.27 per cent of the weight of items included in the Index of Industrial Production (IIP). The industry-wise weights indicated in the ICI are individual industry weight derived from IIP and blown up on pro rata basis to a combined weight of ICI equal to 100 - (Coal 10.33 %, Crude Oil production 8.98 %, Natural Gas 6.88%, Petroleum Refinery 28.04 %, Fertilizers 2.63 %, Steel 17.92 %, Cement production 5.37 % and Electricity generation 19.85%.)

The ICI is widely used by policy makers, including, Ministry of Finance, other Ministries and Departments, Banks financing Infrastructure projects, Reserve Bank of India (RBI) and Railway Board.

 

Frequency and Method of Calculation/Revision of ICI

The Index of Eight Core Industries is a provisional index which is released every month. The index is calculated by using the Laspeyre’s formula of weighted arithmetic mean of quantity relatives.

While compiling the ICI of a particular month, the data of the corresponding month of the previous year is also revised. The revised figures are taken as provided by the respective source agencies[2]. Some source agencies incidentally publish this data on their official websites even before the release of ICI for that month. The monthly press release on ICI clarifies this method of revision through a footnote. Revision allows capturing of the entire production data as it flows in through the year, which would otherwise be lost. Further, a transparent process is followed whereby the data of actual production for each industry is also placed in public domain along with the ICI.

 

Dissemination of the ICI

The index is released on last working day of every month at 5.00 P.M. If last day happens to be a holiday, it is released on first working day of next month. The index is released through Press Information Bureau (PIB) as well as on website of the Office of the Economic Adviser (www.eaindustry.nic.in). The press release to PIB includes both index and growth rates for each industry and at aggregate level for monthly, cumulative (current year and previous year) and annual (last five year).

The monthly, cumulative and annual data including actual production, index and growth rate for all eight industries since 2004-05 onward in Microsoft Excel is also uploaded every month on the website of Office of the Economic Adviser, which is unique to this index. The detailed excel sheet on monthly data is also uploaded on Government of India’s data portal at data.gov.in.

 

Revision of the Index

The Central Statistics Office (CSO), Ministry of Statistics and Programme Implementation, has revised the base year of the all-India Index of Industrial Production (IIP) from 2004-05 to 2011-12. Accordingly, Index of core Industries has also been revised to align with the revised IIP.


1. The Systems of National Accounts 1993 defines a volume index as that “measures the average of the proportionate changes in the quantities of a specified set of goods and services between two periods of time." 2. Source Agencies
The list of source agencies responsible for furnishing the production data to the Office is as below:


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