Relevance: GS-III (Indian Economy – Industrial Growth) | Source: Indian Express;  Government data; Reserve Bank of India analysis

What is the News?

India’s Index of Industrial Production grew by 6.7 percent in November, the highest growth rate in the last 25 months, indicating a revival in industrial activity after recent moderation.

Key Facts

  • Overall IIP growth: 6.7 percent
  • Manufacturing: Fastest growth; main driver of the surge
  • Capital goods: Strong expansion, signalling higher investment activity
  • Mining and electricity: Recovered after weather-related disruptions
  • Growth was supported by festive-season demand, restocking, and a favourable base.

Why it Matters

  • Manufacturing is the largest component of IIP; its recovery supports overall economic growth.
  • Capital goods growth suggests a revival of the investment cycle.
  • IIP is a high-frequency indicator, offering early signals on GDP trends.

Caveats

  • Monthly IIP data is volatile and affected by base effects.
  • Sustained growth depends on global demand, investment momentum, and policy support.
UPSC Prelims Value BoxIndex of Industrial Production measures short-term changes in the volume of production in manufacturing, mining and electricity.
National Statistical Office, Ministry of Statistics and Programme Implementation.

Q. With reference to the Index of Industrial Production in India, consider the following statements:

  1. Manufacturing has the highest weight in the Index of Industrial Production.
  2. Capital goods growth is considered an indicator of future investment activity.

Which of the statements given above is/are correct?

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