Revision of Index of Industrial Production (IIP) Base Year

India’s industrial output, measured by the Index of Industrial Production (IIP), grew by 4.9% in April 2026 under a revised series adopting 2022-23 as the new base year. This growth rate was slightly slower compared to the 5.8% recorded in the same month of the previous year under the old 2011-12 base year.

The IIP revision follows the recent update of Gross Domestic Product (GDP) estimates to the 2022-23 base.

Key Highlights of the New IIP Series (Base 2022-23)

The revised IIP series introduces structural changes to better capture the realities of the contemporary Indian economy.

• Expanded Sectoral Coverage: The number of broad sectoral indices has been increased to four.
  • Retained & Restructured: Mining, Manufacturing, and Electricity (now merged as Electricity and gas supply).
  • Newly Added: Water supply, sewerage and waste management activities.
• Improved Granularity and Sub-classification:
  • Mining: Data is now sub-classified into fuel minerals, metallic minerals, and non-metallic minerals.
  • Electricity: Output is explicitly categorized into renewable and non-renewable energy sources, reflecting India’s energy transition.
• Enlarged Basket of Goods: The new series captures 1,042 products mapped across 463 item groups, a significant increase from the older series (839 items across 407 groups).
• Updated Weightage: The weights assigned to each sector and manufacturing sub-industry have been realigned with the updated Gross Value Added (GVA) from the 2022-23 series. Manufacturing continues to hold the dominant share (~75%).
• Backward Comparability: The Ministry has provided a linking formula to compare data between the new (2022-23) and old (2011-12) series to ensure analytical continuity.

Sectoral Performance Snapshot

Under the newly formulated index (Base: 100 in 2022-23), three of the four major sectors witnessed slowed growth, while one contracted:

1. Broad Sectoral Performance:

• Manufacturing (~75% weight): Grew at 6.2% (down from 6.3% in 2025). Six industries contracted, notably “coke and refined petroleum” (-0.4%), “wearing apparel” (-7%), and “wood products” (-12.5%). The “electrical equipment” industry outperformed, surging by 19.2%.
• Mining & Quarrying: Witnessed a sharp contraction of 5.1%.
• Electricity & Gas Supply: Recorded a growth of 4.9%.
• Water Supply, Sewerage & Waste Management: Registered a solid growth of 6.6%.

2. Use-Based Classification Trends:

• Accelerated Growth: Capital goods (16%), Infrastructure/construction goods (7.1%), and Intermediate goods (7.7%). Strong capital goods performance indicates robust investment and capacity expansion in the economy.
• Decelerated Growth: Primary goods (0.8%), Consumer durables (4.3%), and Consumer non-durables (2.8%), indicating a relative softening in immediate consumer demand compared to the previous fiscal.

Prelims Question

Q. With reference to the recently revised Index of Industrial Production (IIP) series, consider the following statements:

1. The base year for calculating the IIP has been shifted from 2011-12 to 2022-23.
2. The new series classifies the electricity index strictly into renewable and non-renewable energy sources.
3. The weighting of industries within the manufacturing sector is now aligned with the updated Gross Value Added (GVA) 2022-23 series.
4. Water supply, sewerage, and waste management activities have been removed from the core IIP calculations to focus exclusively on manufacturing.

Which of the statements given above are correct?

(a) 1, 2, and 3 only

(b) 2, 3, and 4 only

(c) 1 and 3 only

(d) 1, 2, 3, and 4

Answer: (a) Explanation: Statement 4 is incorrect. Water supply, sewerage, and waste management activities have been newly incorporated into the index, broadening its coverage, rather than being removed.

Mains Examination Question

Q. Macroeconomic indicators must evolve to capture the shifting paradigms of an economy. In this context, discuss the rationale behind revising the base year of the Index of Industrial Production (IIP). How does the inclusion of new sectors and improved granularity in the 2022-23 series reflect India’s current economic transition? (150 words, 10 Marks)

Hints for Mains Answer:

• Introduction: Define IIP briefly and mention the recent shift to the 2022-23 base year.
• Rationale for Revision: Highlight the need to eliminate the “base effect” distortion over time, account for changing consumption/production patterns, and map data accurately with the updated GVA/GDP metrics.
• Reflecting Economic Transition:
  • Energy Transition: Splitting the electricity index into renewables and non-renewables captures India’s commitment to climate goals and the booming green energy sector.
  • Modernizing Civic Infrastructure: Incorporating water supply and waste management highlights the formalization and growing economic weight of urban utility services.
  • Evolving Basket: The jump from 839 to 1,042 products reflects industrial diversification, technological advancements, and the obsolescence of outdated goods.
• Conclusion: Conclude on how a more accurate statistical measure aids policymakers, the RBI, and investors in formulating targeted economic interventions.