India’s ICI gets an updated series: what has changed?, Pg10

Key Highlights:

• The Union Government has released an updated series of the Index of Core Industries (ICI), a key measure of industrial performance in India.
• The base year for the ICI has been updated from 2011-12 to 2022-23, aligning it with other economic metrics.
• The number of core sectors covered in the ICI has increased from eight to nine with the inclusion of iron ore.
• The update aims to make the data more reflective of current economic reality and eliminate double counting in certain sectors.

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Detailed Insights:

• The previous ICI series with a 2011-12 base year was considered significantly outdated, prompting the revision.
• The newly added iron ore sector has been assigned a weight of 4.905% in the updated index.
• The electricity sector's weightage significantly increased from 19.85% to 30.932% in the new series.
• Sectors like coal, natural gas, and refinery products saw their weightages reduced in the revised ICI.
• Steel production calculation now uses a gross output basis, aligning it with the Index of Industrial Production (IIP).
• The coal sector now measures only raw coal, excluding middling and washed coal to prevent double counting.
• While short-term growth figures may vary, the overall industrial growth picture for longer periods remains largely unchanged by the revision.

Key Concepts Involved:

• Index of Core Industries (ICI): An index measuring the output of eight (now nine) core sectors, representing a significant portion of industrial production.
• Index of Industrial Production (IIP): A composite indicator that measures the growth rate of industry groups in the Indian economy.
• Gross Domestic Product (GDP): The total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.
• Gross Value Added (GVA): A measure of the value of goods and services produced in an area, industry, or sector of an economy.