Context: The Union Government released an updated series of the Index of Core Industries (ICI), introducing a revised base year of 2022–23 (replacing 2011–12).
About The Updated Index of Core Industries (ICI):
What It Is?
- The Index of Core Industries (ICI) is a monthly production volume index that measures the combined performance of key infrastructure-supportive core sectors in India. It acts as a high-frequency lead indicator for the broader Index of Industrial Production (IIP), in which these core sectors hold a significant combined weightage.
Published By: The index is compiled and published monthly by the Office of Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), under the Ministry of Commerce and Industry.
Aim: The revision aims to align the core sector gauge with structural shifts, modern consumption patterns, and updated macroeconomic metrics—including national accounts (GDP/GVA), the Consumer Price Index (CPI), and the IIP—offering a more accurate view of contemporary industrial activity.
Key Changes in the Updated Series:
- Base Year Update: Updated to 2022–23=100 from the outdated 2011–12 base year, better reflecting present-day manufacturing and industrial dynamics.
- Expansion to Nine Sectors: Expanded from 8 to 9 core industries through the addition of Iron Ore. Iron ore was added due to its critical role as an industrial input, receiving a weight of 4.905%.
- Gross Steel Production Accounting: Replaced the previous net production metric for steel with gross production data, establishing procedural consistency with the IIP framework.
- Elimination of Double-Counting in Coal: Narrowed the coal index to track raw coal exclusively, excluding coal middlings and washed coal since both are derived from raw coal.
- Significant Weight Redistribution: Rebalanced sector weights using pro-rata distributions derived from the 2022–23 IIP series:
- Electricity: Gained significant weightage, becoming the largest sector at 30.932% (up from 19.85%).
- Refinery Products: Decreased to 22.572% (down from 28.04%).
- Coal & Natural Gas: Reduced to 5.596% (from 10.33%) and 3.841% (from 6.88%), respectively.
- Fertilizers: Slightly increased to 2.731% (from 2.63%).
Significance:
- Updating the base year to 2022–23 improves the accuracy of industrial output and economic assessment.
- Aligns the ICI with IIP, GDP, WPI, and Producer Price Indices, supporting better economic and policy decisions.
