Showing posts with label Economic Indicator. Show all posts
Showing posts with label Economic Indicator. Show all posts
Sunday, August 5, 2012

Economic Indicator - IIP - Index of Industrial Production

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IIP - Index of Industrial Production is an Economic Indicator tracking the production activities on a monthly /quaterly/half yearly/annual basis in the country . Like every other indicator , IIP numbers are produced with a reference point in the past . In case of India , the revised benchmark is 1993-94 , for US its 2002 with level of 100 . The calculated data can be tabulated to form a time series in order to compare the output across various years .

The IIP numbers are calculated in 3 ways as described below :
(1)Use Based -  The industry is categorized broadly as Consumer Goods, Durable and Non durable goods ,Basic and Intermediate goods . 
(2) Sector wise - Industry is categorized sector wise like Electricity , Mining , Manufacturing etc
(3)Detailed Sector - Industry is categorized in to various detailed sectors, the link for which has been provided below . 
Sectors Under Consideration for IIP Calculation : Click on the link here to get the complete list of sectors . Click here

Data Sources for calculation of IIP (for India) :  .The data for the IIP estimate is supplied by 15 source agencies which include Department of Industrial Policy and Promotion, Indian Bureau of Mines, Central Statistical Organisation and Central Electricity Authority, among others.

How is IIP index calculated : IIP index is calcualted with the Laspeyre's formula . The calculation involves following steps . 
(1) Identifying the weights of the various sectors on Product level , Product Group level and Industry level . These weights will be identified on the basis of the total output in sales or gross output value .  The weights and the sectors are updated periodically to incorporate the changing market scenario and the economic dynamics . Weights on the product level can be updated annually while those of Industry level can be updated every 5 years
(2) Once the weights are calculated the IIP number is calculated ,The index is a simple weighted arithmetic mean of production relatives calculated by using Laspeyre’s formula
I=Σ(Wi*Ri)/ΣWi,
Where I is the Index, Ri is the production relative of the i-th item for the month in
question and Wi is the weight allotted to it based on Gross Output.
The item-wise indices are vertically aggregated at 2-digit of industrial classification
based on weighted average, weights are proportionate to Gross Value Added.

Information Sources :
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Tuesday, April 3, 2012

Economic Indicators : Debt/GDP Ratio

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Ratio of Debt to GDP is one of the imp factors from economic point of view, used to gauge the economic health of the country. Usually countries strive to have this ratio as low as possible so as to avert such financial and unexpected circumstances.
To start with , lets understand the concept of  GDP   -In a simple way, it’s summing up what all the people earned OR spent over a definite period of time .Logically; both the measures should arrive at the same conclusion.
Alternative Definition is: Gross domestic product (GDP) refers to the market value of all final goods and services produced in a country in a given period.
There are multiple ways of calculating this GDP. For details on how to calculate, click here

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