Important for UPSC Prelims: Economy
What is the Index of Core Industries (ICI)?
- The Index of Core Industries (ICI) measures the performance of India’s core industrial sectors, which serve as the backbone of industrial production.
- It acts as a leading indicator of industrial growth and significantly influences the Index of Industrial Production (IIP).
- Released by: Office of the Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry.
- Frequency: Monthly.
- Current Base Year: 2022–23.
Why is ICI Important?
- Measures the performance of India’s core industrial sectors.
- Acts as a leading indicator of industrial growth.
- Helps policymakers assess industrial activity and formulate economic policies.
- Provides early signals about trends in the Index of Industrial Production (IIP).
Key Features of the Revised ICI Series (Base Year: 2022–23)
1. Expansion of Core Industries
- Iron Ore has been added as the 9th core industry.
- The revised ICI covers Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, Electricity, and Iron Ore.
2. Methodological Revisions
- Steel Index is now based on Gross Production instead of Net Production.
- Only Raw Coal is included; Coal Middling and Washed Coal have been excluded to avoid double counting.
3. Revised Sectoral Weights
- Sectoral weights have been revised based on the IIP (Base Year: 2022–23) and normalised to 100.
| Relationship between ICI and IIP The Index of Industrial Production (IIP) measures the monthly growth of industrial output in the Mining, Manufacturing, and Electricity sectors and is released by the National Statistics Office (NSO), MoSPI. The Index of Core Industries (ICI) serves as a leading indicator of the IIP, as core industries supply essential inputs to the industrial sector. Combined weight of ICI in IIP: 32.88% (Base Year: 2022–23), compared to 40.27% under the 2011–12 series. |
Conclusion
The Index of Core Industries (ICI) serves as a key barometer of India’s industrial sector. Its close linkage with the Index of Industrial Production (IIP) makes it an essential indicator for assessing industrial performance and the overall health of the economy.
| This Concept has been elaborately discussed in the following article: India Updates the Index of Core Industries (ICI) Series |