Index of Industrial Production (IIP)
Index of Industrial Production (IIP) is an index which helps one to arrive at the correct growth of various sectors in an economy. We can also say that it is an indication of the status of production in the industrial sector for a given period of time as compared to a reference period of time.
When we talk of Indian Index of Industrial Production, it focuses on sectors like mining, electricity, Manufacturing & General.
- The procedure for arriving at the base year is as following:
- First the base year is decided on the basis of which all the index figures would be calculated. In India, the base year is 2004-2005.
- The index is computed using the weighted arithmetic mean of quantity relatives with weights being allotted to various items in proportion to value added by manufacture in the base year by using Laspeyre’s formula: I = ? (WiRi)/ ? Wi
Where I is the index, Ri is the production relative of the ith item for the month in question and Wi is the weight allotted to it.
Keep visiting our website to understand that how IIP India data affects the stock market as this data is eagerly awaited by the traders and stock market experts to arrive at a correct analysis for the stock market.
