Relevance: GS III (Indian Economy) | Source: The Hindu 

1. What is the News? 

• India’s factory output (measured by the IIP) grew by a healthy 5.2% in February 2026.
• The Heroes: This growth happened mostly because of high production in Manufacturing and Capital Goods (heavy machinery).
• The Slowdowns: The Mining and Electricity sectors actually slowed down, but the good performance in manufacturing saved the overall score.

2. What is the IIP? 

Think of the Index of Industrial Production (IIP) as a monthly report card for India’s factories and industries.

• Who makes this report card? It is published every month by the National Statistical Office (NSO). This office works under the Ministry of Statistics and Programme Implementation (MoSPI).
• Base Year: To measure growth, they compare today’s production with the production in the year 2011-2012 (called the Base Year).

3. The Three Main Pillars of IIP

The IIP looks at three broad areas. However, they are not treated equally; some are considered much more important (given more “weight”).

• 1. Manufacturing (~77.6% Weight): Making goods in factories. Because this holds the maximum weight, if manufacturing does well, the entire IIP goes up (even if mining and electricity do badly).
• 2. Mining (~14.3% Weight): Digging out coal, iron, and other minerals.
• 3. Electricity (~7.9% Weight): Total power generated across the country.

4. The “Eight Core Industries” 

Inside the broad industrial sector, there are 8 specific industries that act as the foundational backbone of our economy.

• Together, these 8 industries make up a large chunk (40.27%) of the total IIP.
• Memorize the Order (from Highest to Lowest Weight):
  1. Refinery Products (Highest weight)
  2. Electricity
  3. Steel
  4. Coal
  5. Crude Oil
  6. Natural Gas
  7. Cement
  8. Fertilizers (Lowest weight)

5. What are “Capital Goods”? 

The news highlighted a huge jump in “Capital Goods.” What does this mean?

• Simple Meaning: Capital goods are large machines, tools, or commercial vehicles used by factories to make other consumer goods. (For example: A giant oven bought by a bakery is a capital good).
• Why is this good news? If capital goods production is high, it means businessmen are feeling confident. They are spending big money to build new factories, buy new machines, and expand their businesses. This creates jobs and ensures long-term economic growth.

The “UPSC Trap”

• The “Releasing Agency” Trap: UPSC will try to trick you by saying the IIP is released by the Reserve Bank of India (RBI) or the Ministry of Commerce. Incorrect. It is released by the NSO (under MoSPI).
• The “Core Industry” Trap: A statement might say, “Manufacturing is the largest among the Eight Core Industries.” Incorrect. Manufacturing is a broad pillar of the IIP. The Eight Core Industries are specific sectors (like Refinery, Steel, Cement), with Refinery Products being the largest.

UPSC Value Box

Key Term	Simple Meaning
NSO (National Statistical Office)	The government agency under MoSPI that calculates major economic data like the IIP and the country’s GDP.
Capex (Capital Expenditure)	Money spent by a company or the government to buy, build, or upgrade physical assets like buildings, machines, and roads.

With reference to the Index of Industrial Production (IIP) in India, consider the following statements:

1. It is compiled and published monthly by the National Statistical Office (NSO).
2. Among the three broad sectors of the IIP, the Electricity sector holds the highest weightage.
3. The Eight Core Industries comprise more than 40% of the total weight of items included in the IIP.
4. Refinery products have the highest weight among the Eight Core Industries.

Which of the statements given above are correct?

(a) 1, 2 and 3 only

(b) 1, 3 and 4 only

(c) 2 and 4 only

(d) 1, 2, 3 and 4

Correct Answer: (b)