Context
- Recently, India’s Index of Eight Core Industries (ICI) recorded a modest growth of 1.7%, indicating a weak start to the fiscal year.
- The annual average growth slowed to 2.8% (2025-26), compared to 4.5% in the previous year (2024-25) and more than 7% growth during the earlier three years, reflecting a slowdown in industrial demand and economic activity.
1. Key Structural Findings from the Article
- The Energy/Fuel Paradox: Out of the eight core sectors, five contracted simultaneously—Crude Oil, Natural Gas, Coal, Fertilizer, and Petroleum Refinery Products. The crude oil and natural gas sectors contracted for 16 and 22 consecutive months respectively, showing long-term domestic resource challenges.
- The Drivers of Growth: Only three sectors recorded positive growth—Steel, Cement, and Electricity. This growth highlights that capital infrastructure pushed by government capital expenditure remains the sole active engine, while rural and fuel demand are faltering.
- Monsoon/Climate Risks: The report highlights that a below-normal monsoon combined with above-normal El Niño patterns has further dampened rural demand and caused a contraction in fertilizer output.
2. All About the 8 Core Industries
The Index of Eight Core Industries (ICI) is a production volume index that measures the collective and individual performance of production in selected elite infrastructure industries. It serves as a crucial lead indicator of the industrial and infrastructure landscape.
- Compiling & Releasing Authority: Compiled monthly by the Office of the Economic Adviser (OEA) under the Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce and Industry.
- Base Year: 2011–12.
- Linkage with IIP: The eight core industries constitute 40.27% of the total weight of items included in the broader Index of Industrial Production (IIP).
| Rank | Core Sector Industry | Individual Weight in IIP (%) |
| 1 | Petroleum Refinery Products (Highest Weight) | 28.04% |
| 2 | Electricity Generation | 19.85% |
| 3 | Steel Production | 17.92% |
| 4 | Coal Production | 10.33% |
| 5 | Crude Oil Production | 8.98% |
| 6 | Natural Gas Production | 6.88% |
| 7 | Cement Production | 5.37% |
| 8 | Fertilizer Production (Lowest Weight) | 2.63% |
| — | Combined Weight | 40.27% |
Important Keywords to Remember
- Index of Industrial Production (IIP): A composite indicator tracking the growth rate of industry groups classified under Mining, Manufacturing, and Electricity. It is compiled and published monthly by the National Statistical Office (NSO), Ministry of Statistics and Programme Implementation (MoSPI).
- Purchasing Managers’ Index (PMI): An economic indicator derived from monthly surveys of private sector companies. A PMI above 50 indicates expansion over the previous month; below 50 indicates contraction; and exactly 50 indicates no change. It tracks manufacturing and services activity earlier than official government data.
With reference to the Index of Eight Core Industries (ICI), consider the following statements:
1. The Index of Eight Core Industries is compiled monthly by the Office of the Economic Adviser under the Ministry of Commerce and Industry.
2. Fertilizer production carries the highest weight among the eight core industries in the Index of Industrial Production (IIP).
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer:
(a) 1 only
Explanation:
• Statement 1 is correct: The ICI is compiled and released monthly by the Office of the Economic Adviser (OEA) under DPIIT, Ministry of Commerce and Industry.
• Statement 2 is incorrect: Petroleum Refinery Products carry the highest weight (28.04%), while Fertilizers have the lowest weight (2.63%) in the IIP.
