Agricultural production index
Topic: Inflation and Index Numbers: CPI, WPI, IIP and the Deflator · NCERT: Class 11, Ch 7 "Index Numbers"
Meaning
The agricultural production index is a quantity index, which means it tracks physical output, not prices. It shows how much the farm sector produces compared with a base year, where the base is set at 100. It works as a ready reckoner, a quick one-number check of how agriculture is doing. Related indices track the area sown, the production and the yield (output per hectare) of principal crops. The Economic Survey publishes the index of yield of principal crops.
Example
After a good monsoon, the index rises above its level of the previous year. After a monsoon failure, it falls. A policymaker can see the change at a glance without adding up the output of dozens of separate crops.
Don't confuse with
- Index of Industrial Production (IIP): it measures the volume of output from mining, manufacturing and electricity, not from farms.
- Food inflation: it measures the rise in food prices, not the amount of food produced.