Index of Core Industries Updated with Base Year 2022-23

Index of Core Industries Updated with Base Year 2022-23

#GS-3 #Economy #Infrastructure #Government Policies & Interventions #Industrial Policy #Current Events #National

Why in News

  • The **Office of Economic Adviser (OEA)** under the **Ministry of Commerce and Industry** released the first provisional **Index of Core Industries (ICI)** with a new base year of **2022-23**.
  • This new series replaces the older **2011-12** base year and applies retrospectively from **April 2023**, along with historical back data for easy comparison.

What is the Index of Core Industries (ICI)

  • The **Index of Core Industries (ICI)** is a key economic indicator that tracks the monthly output of India's foundational industrial sectors.
  • The government normally releases the provisional index data on the **20th day** of the following month or the next working day.
  • These core sectors form the structural backbone of the economy, and their total weight in the **Index of Industrial Production (IIP)** is now **32.88%** under the new series, down from **40.27%** in the **2011-12** series.

Key Methodological Changes in the New ICI Series (2022-23)

  • The government expanded the list of core sectors from eight to nine by adding **Iron Ore**, recognizing its crucial role in steel production and overall industrial growth.
  • As a result, the core list now covers **Coal**, **Crude Oil**, **Natural Gas**, **Refinery Products**, **Fertilizers**, **Steel**, **Cement**, **Electricity**, and **Iron Ore**.
  • The calculation for the steel sector now uses **Gross Production Data** instead of net data, bringing it in line with the updated **Index of Industrial Production (IIP)**.
  • To avoid counting the same production twice, the index includes only **Raw Coal** while excluding **Coal Middling** and **Washed Coal**.
  • Sector weights were recalculated using the **2022-23** base year, where **Electricity** holds the highest weight at **30.93%**, followed by **Refinery Products (22.57%)**, **Steel (17.58%)**, **Crude Oil (7.43%)**, **Coal (5.59%)**, **Iron Ore (4.90%)**, **Cement (4.41%)**, **Natural Gas (3.84%)**, and **Fertilizers (2.73%)**.
  • To compare past numbers with new ones accurately, officials established a linking factor using the ratio of geometric means between the old and new series.
  • The official linking factor for the overall index stands at **1.47**.
  • In **June 2026**, the core index recorded a provisional annual growth rate of **5.0%**, showing a clear recovery from **3.2%** in **May 2026**.
  • Sectors like **Iron Ore (43.9%)**, **Electricity (9.8%)**, **Cement (9.8%)**, **Steel (4.6%)**, and **Coal (1.4%)** grew positively, whereas **Natural Gas**, **Crude Oil**, **Refinery Products**, and **Fertilizers** shrank.
  • Strong performance in **Iron Ore** and **Electricity** acted as the primary growth engine for the overall index in recent months.
  • Between **April and June 2026**, cumulative core growth reached **3.6%**, which is significantly higher than the **1.0%** recorded during the same period in the previous year.

Difference between ICI and IIP

  • While the **Index of Core Industries (ICI)** focuses specifically on foundational infrastructure sectors, the **Index of Industrial Production (IIP)** tracks short-term changes across the entire industrial landscape.
  • The **Office of Economic Adviser (OEA)** under the **Ministry of Commerce and Industry** compiles the ICI, whereas the **National Statistical Office (NSO)** under **MoSPI** prepares the IIP.
  • In terms of coverage, the ICI tracks **9 Core Industries**, while the IIP covers three broad sectors: Manufacturing, Mining, and Electricity.
  • The ICI acts as a leading subset of the IIP, offering an early signal of broader industrial momentum.
  • Policymakers use the ICI to pinpoint supply bottlenecks in key sectors, while the **Reserve Bank of India (RBI)** relies on the IIP to design monetary and fiscal policy.

Frequently Asked Questions (FAQs)

  • The **Index of Core Industries (ICI)** is a monthly report by the **Office of Economic Adviser (OEA)** that tracks nine key infrastructure industries accounting for **32.88%** of the **Index of Industrial Production (IIP)**.
  • The main updates in the **2022-23** series include adding **Iron Ore**, switching to gross steel data, dropping processed coal items, updating sector weights, and setting a **1.47** linking factor.
  • The index matters because it serves as an early indicator of economic activity, helping leaders monitor infrastructure health and fix supply chain bottlenecks.
  • The core index measures only **9 key infrastructure sectors**, serving as an early subset, whereas the **Index of Industrial Production (IIP)** measures complete industrial output across manufacturing, mining, and power.
  • Updating base years is necessary so that economic data accurately reflects modern industrial patterns, improved calculation methods, and updated production weights.