Use-based classification of IIP
Also called: Use-based groups · Topic: Inflation and Index Numbers: CPI, WPI, IIP and the Deflator · NCERT: Class 11, Ch 7 "Index Numbers"
Meaning
The use-based classification groups the items in the Index of Industrial Production (IIP), India's monthly index of industrial output volume, by their end use. There are six groups: primary goods, capital goods, intermediate goods, infrastructure/construction goods, consumer durables and consumer non-durables. The groups show what kind of demand is driving industry. Capital goods signal investment. Consumer goods signal household demand. Infrastructure/construction goods reflect public capex and housing.
Example
Weights in the 2011-12 series (MoSPI 2016-17):
- primary goods 34.1 (the largest group)
- non-durables 15.3
- durables 12.8
- infrastructure/construction goods 12.3
- intermediate goods 17.2
- capital goods 8.2 (the smallest group)
Weak consumer non-durables point to stress in rural or mass consumption. Weak capital goods mean firms are not adding capacity.
Don't confuse with
- Sectoral classification of IIP: this groups items by sector (mining 14.4, manufacturing 77.6, electricity 8.0). Manufacturing is the largest sector, but primary goods is the largest use-based group.