UPSC Prelims Practice Questions — Quick Estimates of Index of Industrial Production and Use- Based Index for the Month of August 2026 (Base 2022-23=100)

Q1. With reference to a fixed-base Laspeyres index such as India's Index of Industrial Production, consider the following statements: Which of the statements given above is/are correct?

  1. Each item's weight stays at its base-year share until the next base revision, even if that item's share in actual production changes a lot in the meantime.
  2. As old firms and products disappear and new ones appear outside the fixed list, the index tends to understate output growth as the base year recedes.
  3. A chain-linked index, which updates weights every year, reduces the bias that comes from keeping base-year weights for a long time.
  • A. 2 and 3 only
  • B. 1, 2 and 3
  • C. 1 only
  • D. 1 and 2 only

Q2. Consider the following statements about the revision of the base of the Index of Industrial Production (IIP) to 2022-23: Which of the following is correct in respect of the above statements?

  1. After the base was revised to 2022-23, IIP figures for months before April 2026 can no longer be compared with the new series, because the old series cannot be linked to the new one.
  2. A base revision updates the item basket and weights to reflect changes in the structure of production, such as obsolete products and newly emerging ones.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q3. Consider the following statements about the August 2026 Index of Industrial Production (IIP) release: Which of the following is correct in respect of the above statements?

  1. The headline growth for August 2026 is measured against August 2025 rather than against July 2026.
  2. The August 2026 figure is a quick estimate that will be revised as returns from more factories arrive.
  • A. Both Statement-I and Statement-II are correct and Statement-II explains Statement-I
  • B. Both Statement-I and Statement-II are correct, but Statement-II does not explain Statement-I
  • C. Statement-I is correct, but Statement-II is incorrect
  • D. Statement-I is incorrect, but Statement-II is correct

Q4. In the use-based classification of the Index of Industrial Production, which one of the following patterns in a month would most strongly suggest that industrial growth is being led by investment rather than by household demand?

  • A. Consumer durables growing faster than both capital goods and infrastructure/construction goods
  • B. Primary goods and consumer non-durables growing faster than intermediate and capital goods
  • C. Capital goods and intermediate goods growing much faster than consumer non-durables
  • D. Consumer durables and consumer non-durables growing faster than capital goods and intermediate goods

Q5. With reference to the sectoral and use-based classifications of the Index of Industrial Production (IIP), consider the following statements: Which of the statements given above are correct?

  1. The sectoral and use-based classifications are two different groupings of the same underlying production data, not two separate surveys.
  2. Electricity output falls under primary goods in the use-based classification.
  3. Sector weights in the general index are based on each sector's share of gross value added in the base year, which is why manufacturing largely drives headline movements.
  4. Passenger cars and two-wheelers are classified as consumer non-durables, since households buy them for final consumption.
  • A. 1, 2, 3 and 4
  • B. 1 and 2 only
  • C. 3 and 4 only
  • D. 1, 2 and 3 only

Q6. Consider the following assertion: 'In the 2022-23 series of the Index of Industrial Production, the performance of manufacturing largely decides the headline growth figure.' Which of the statements given below support/supports the above assertion?

  1. Manufacturing carries a weight of about 76 out of 100 in the general index.
  2. Among the four sectors, water supply, sewerage and waste management recorded the highest index level in August 2026.
  3. In August 2026, headline growth (8.0%) stayed close to manufacturing growth (9.0%) even though mining contracted by 5.6%.
  • A. 1 and 3 only
  • B. 2 and 3 only
  • C. 1, 2 and 3
  • D. 1 only

Q7. With reference to the new price indices with base 2022-23, consider the following statements: Which of the statements given above is/are correct?

  1. The Output Producer Price Index is compiled at purchaser's prices so that it reflects what final buyers pay for goods.
  2. The Input Producer Price Index is compiled at purchaser's prices, since industries buy their inputs from the market.
  3. The Wholesale Price Index and the Output Producer Price Index are both compiled at basic prices, which exclude net taxes and trade and transport margins.
  • A. 1 only
  • B. 1 and 3 only
  • C. 2 and 3 only
  • D. 1, 2 and 3