India Updates the Index of Core Industries (ICI) Series

Context

• The Union Government has released a revised Index of Core Industries (ICI) series with a new base year (2022–23), expanded sectoral coverage, updated methodology, and revised sectoral weights.
• The revision aims to better reflect the current industrial structure and align the ICI with updated macroeconomic indicators such as Gross Domestic Product (GDP)and Gross Value Added(GVA) and IIP.

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.

Major Changes in the Revised ICI Series

1. Base Year Revised

• The base year has been revised from 2011–12 to 2022–23. This makes the Index of Core Industries (ICI) more representative of the current structure of the Indian economy and provides a more accurate measure of industrial activity.

2. Expansion of Sectoral Coverage

• The number of core industries has increased from 8 to 9 with the inclusion of Iron Ore as a separate core industry due to its growing importance.
• The revised ICI now covers Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, Electricity, and Iron Ore.

3. Changes in Methodology

  Steel

• Steel production is now measured on a Gross Output basis instead of the earlier Net Output basis.
• This brings the ICI methodology in line with the Index of Industrial Production (IIP).

  Coal

• The revised series measures only raw coal production.
• Middling coal and washed coal have been excluded to eliminate double counting, as both are produced from raw coal.

4. Revision in Sectoral Weights

• The inclusion of Iron Ore and the increase in the number of sectors have led to a redistribution of weights.
• The Government has also revised the weights of existing sectors to maintain consistency with the updated IIP series.

Major Changes in Weights

Sector	Change in Weight
Electricity	19.85% → 30.93% (Highest Increase)
Iron Ore	Newly Added – 4.905%
Fertilizers	2.63% → 2.731%
Coal	10.33% → 5.596%
Natural Gas	6.88% → 3.841%
Refinery Products	28.04% → 22.572%

Why Were These Changes Made?

• To reflect the current economy: The revised series better represents India’s present industrial structure and production pattern.
• To ensure consistency: It aligns the ICI with the revised IIP and National Accounts for better comparability.
• To improve accuracy: Methodological changes remove issues like double counting, making industrial growth estimates more reliable.

About Index of Industrial Production (IIP) The Index of Industrial Production (IIP) is a monthly indicator that measures the growth in industrial output in India. It covers three sectors: Mining, Manufacturing, and Electricity. Released by: National Statistics Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI). Base Year: 2022–23. It is one of the most important indicators used to assess the performance of the industrial sector and overall economic activity.

Q. With reference to the recently revised Index of Core Industries (ICI), consider the following statements:
1. The base year of the Index of Core Industries has been revised from 2011–12 to 2022–23.
2. Iron Ore has been included as a new core industry in the revised series.
3. Steel production in the revised series is measured on a Gross Output basis instead of a Net Output basis.
4. The revised series continues to include washed coal and middling coal in coal production.
Which of the statements given above are correct?
A. 1, 2 and 3 only
B. 1 and 4 only
C. 2, 3 and 4 only
D. 1, 2, 3 and 4
Answer: A
Explanation:
Statement 1: Correct. The base year has been revised from 2011–12 to 2022–23.
Statement 2: Correct. Iron Ore has been added as the 9th core industry.
Statement 3: Correct. Steel is now measured on a Gross Output basis to align with the IIP methodology.
Statement 4: Incorrect. The revised series measures only raw coal. Washed coal and middling coal have been excluded to avoid double counting.