Core sector indices are seen as lead indicators of industrial activity. Critically evaluate their reliability given provisional-to-final revisions and sectoral weight concentration.

The Index of Core Industries (ICI) is compiled by the Office of Economic Adviser. It tracks nine basic sectors whose weights come from the Index of Industrial Production (IIP) [1][2]. ICI grew 7.9% in September 2026 (provisional) [1]. It is a useful lead indicator, but how far it can be trusted depends on the conditions below.

Strengths as a Lead Indicator

• Timeliness: ICI is released on the 20th of the following month [1]. The IIP comes out with a 28-day lag [4].
• Updated base: The new 2022-23 series adds Iron Ore, measures Steel by gross output and uses IIP 2022-23 weights [2][3].
• Input linkages: Power, steel and cement feed manufacturing and construction. For example, cement grew 10.1% in Apr–Sep 2026, which signals infrastructure demand [1].

Limitation 1: Provisional-to-Final Revisions

• August 2026 growth was revised from 4.8% to 5.9% [1]. A 1.1 pp change is large when the headline is only 5–8%.
• The June 2026 index moved from 119.6 to 120.7 on revision [1][2].
• The first figure shows the direction of change, not its exact size.

Limitation 2: Sectoral Weight Concentration

• Electricity (30.9), Refinery Products (22.6) and Steel (17.6) together carry about 71% of the weight [1].
• Electricity alone added about 3.7 pp of September's 7.9% [1]. A heatwave-driven demand peak, such as the record 256.1 GW in April 2026 [5], can lift the index even when factory activity has not broadly recovered.
• Hidden distress: Fertilisers (weight 2.7) fell 11.7% but cut the headline by only about 0.3 pp [1]. Refinery growth (+10.3%) hides falling domestic crude output (−1.4%) [1].

Limitation 3: Base Effects and Series Breaks

• Growth of 5.1% in Apr–Sep 2026 follows just 2.5% a year earlier. The two-year average of about 3.8% is below the 4.3% of 2024-25 [1].
• Old and new series are joined by a linking factor of 1.47 [2]. MoSPI cautions that the old and new IIP series may not correspond one-to-one [4].

Overall, the ICI is a timely and representative early signal. However, its first figure and its heavy dependence on power make it a guide to direction rather than a precise measure. It should be read together with final revisions, sector-wise contributions, two-year averages and the IIP. Publishing contribution and revision tables would strengthen it, in line with the data-quality aims of the 2022-23 base revision.