Index of Eight Core Industries (ICI)
Indian Economy
- PYQs5
- Articles1
Foundation
Static background & why it matters
The Index of Eight Core Industries (ICI) is a monthly production index that measures the combined and individual performance of eight strategically important infrastructure sectors in the Indian economy. It serves as a crucial barometer for industrial activity and overall economic health, compiled and released by the Office of the Economic Adviser (OEA), Department for Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry.
UPSC frequently asks about key economic indicators, their components, calculation, and what they signify about the health of the economy. Understanding ICI is crucial for analyzing industrial performance and overall economic growth trends.
- Index of Eight Core Industries (ICI)
- A production index measuring the performance of eight key infrastructure sectors in India.
- Index of Industrial Production (IIP)
- A composite indicator that measures the growth rate of industrial sectors (Mining, Manufacturing, Electricity) in the Indian economy.
- Base Year
- A reference year for calculating index numbers, currently 2011-12 for both ICI and IIP.
- Compiling Authority
- Office of the Economic Adviser (OEA), DPIIT, Ministry of Commerce & Industry for ICI; National Statistical Office (NSO), MoSPI for IIP.
Static core
Acts, bodies, facts & tables
The eight core industries are Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, and Electricity. These sectors are considered foundational due to their significant backward and forward linkages within the economy, impacting a wide range of other industries and overall economic growth.
ICI is often referred to as a 'lead indicator' for industrial activity because its components represent critical inputs for manufacturing, construction, and other service sectors. Its performance often foreshadows trends in the broader Index of Industrial Production (IIP) and overall GDP growth.
- Base Year
- 2011-12 for ICI.
- Compiling Authority
- Office of the Economic Adviser (OEA), DPIIT.
- Weight in IIP
- Accounts for 40.27% of the weight of items in IIP.
- Significance
- Serves as a lead indicator for industrial activity and overall economic health.
- Highest Weight in ICI
- Refinery Products (28.04%).
- Lowest Weight in ICI
- Fertilizers (2.63%).
| Industry | Weight in ICI (%) |
|---|---|
| Refinery Products | 28.04 |
| Electricity | 19.85 |
| Steel | 17.92 |
| Coal | 10.33 |
| Crude Oil | 8.98 |
| Natural Gas | 6.88 |
| Cement | 5.37 |
| Fertilizers | 2.63 |
| Feature | Index of Eight Core Industries (ICI) | Index of Industrial Production (IIP) |
|---|---|---|
| Scope | 8 key infrastructure sectors | Broader industrial sectors (Mining, Manufacturing, Electricity) |
| Components | Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, Electricity | Mining (14.37%), Manufacturing (77.63%), Electricity (7.99%) |
| Weight in IIP | 40.27% | 100% |
| Indicator Type | Lead indicator for industrial activity | Composite indicator for overall industrial growth |
| Compiling Authority | OEA, DPIIT, Ministry of Commerce & Industry | National Statistical Office (NSO), MoSPI |
| Base Year | 2011-12 | 2011-12 |
| Type | Reference |
|---|---|
| Conceptual area | Indian Economy |
| Body | Role |
|---|---|
| Ministry of Commerce & Industry | Compiles and releases |
Exam lens
Prelims framing, traps & PYQs
For Prelims, questions on ICI frequently test knowledge of its components (which industries are included/excluded), their relative weights, the compiling agency, the base year, and its relationship with the Index of Industrial Production (IIP). Candidates should be able to identify the largest and smallest weighted sectors and understand the basic implications of ICI trends.
For Mains, understanding ICI is crucial for analyzing industrial performance, infrastructure development, and overall economic growth trends. Questions may require discussing the significance of ICI as a lead indicator, its role in policy formulation, how its performance reflects the health of the economy, especially in the context of infrastructure bottlenecks, industrial slowdowns, or recovery phases. Its linkage to broader economic indicators like GDP and employment is also important.
- Measures output of 8 key infrastructure sectors.
- Accounts for 40.27% of IIP.
- Components: Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement, Electricity.
- Indicates industrial health and economic growth momentum.
- Recent data shows significant slowdown, signaling systemic domestic issues.
| Year | Framing tags |
|---|---|
| 2021 | Multi-statement analysis, Conceptual understanding |
| 2020 | Factual recall, Terminology-based question |
| 2020 | Multi-statement analysis, Conceptual understanding |
| 2015 | Factual recall, Terminology-based question |
| 2015 | Factual recall, Institutional roles and functions |
Latest
Current affairs & evolution
Recent ICI data often serves as an early warning signal for the economy, indicating potential shifts in industrial momentum and overall growth prospects, with fluctuations prompting analysis of underlying economic health and policy responses.
Analyzing the monthly performance of ICI provides immediate insights into the current state of key infrastructure sectors. A consistent decline in ICI growth can signal a broader industrial slowdown, impacting employment, investment, and overall GDP growth, often prompting 'alarm bells' among economists and policymakers.
Timeline
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Indian Economy
Conceptual area
-
Prelims 2015
Factual recall, Terminology-based question
-
Prelims 2015
Factual recall, Institutional roles and functions
-
Prelims 2020
Factual recall, Terminology-based question
-
Prelims 2020
Multi-statement analysis, Conceptual understanding
-
Prelims 2021
Multi-statement analysis, Conceptual understanding
-
Alarm bells: on the Index of Eight Core Industries data
The Index of Eight Core Industries (ICI) measures the combined performance of eight crucial infrastructure sectors: coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity. It accounts for 40.27% of the weight of items included in the Index of Industrial Production (IIP) and serves as a lead indicator for industrial activity.
See also
Dashed boxes: related topics without a notes page yet. Tap a solid box to open notes.
Past papers
2015–2021 · 4 questions
In the news
Alarm bells: on the Index of Eight Core Industries data
The Index of Eight Core Industries (ICI) measures the combined performance of eight crucial infrastructure sectors: coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, and electricity. It accounts for 40.27% of the weight of items included in the Index of Industrial Production (IIP) and serves as a lead indicator for industrial activity.
Try these PYQs
In the Index of Eight Core Industries, which one of the following is given the highest weight?
About Eight Core Sectors: These comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP). The eight core sector industries in decreasing order of their weightage:
Refinery Products> Electricity> Steel> Coal> Crude Oil> Natural Gas> Cement> Fertilizers.
Consider the following statements:
1. The weightage of food in Consumer Price Index (CPI) is higher than that in Wholesale Price Index (WPI).
2. The WPI does not capture changes in the prices of services, which CPI does.
3. Reserve Bank of India has now adopted WPI as its key measure of inflation and to decide on changing the key policy rates.
Which of the statements given above is/are correct?
Statement 1 is correct. As per the data given in the Economic Survey 2019-2020, the weightage of food in the Consumer Price Index (CPI) Combined is 45.9% as compared to 24.4% in Wholesale Price Index (WPI). Statement 2 is correct. The CPI measures the average change in prices over time that consumers pay for a basket of goods and services, commonly known as inflation, whereas WPI does not measure the average change in prices. Statement 3 is incorrect. In April 2014, the RBI adopted the Consumer Price Index (CPI) as its key measure of inflation. Hence, option A is the correct answer.
Which of the following brings out the ‘Consumer Price Index Number for Industrial Workers’?
The Labour Bureau, attached to the Ministry of Labour and Employment, is responsible for compiling and publishing the Consumer Price Index Number for Industrial Workers (CPI-IW) in India. This index tracks changes in the retail prices of a basket of goods and services consumed by industrial workers. It serves as a crucial indicator of inflation faced by this specific segment of the population. The Labour Bureau is responsible for maintaining:
- CPI (Industrial Workers) - CPI (Rural Labourers) - CPI (Agricultural Labourers)
With reference to Indian economy, demand pull-inflation can be caused/increased by which of the following?
1. Expansionary policies
2. Fiscal stimulus
3. Inflation-indexing wages
4. Higher - purchasing power
5. Rising interest rates
Select the correct answer using the codes given below.
Expansionary policies: Expansionary policies like increased government spending or lower interest rates can stimulate economic activity and consumer spending. This can lead to excess demand that outstrips supply, causing prices to rise. Fiscal stimulus: Similar to expansionary policies, fiscal stimulus through government spending injections can create an inflationary gap if it's excessive. Higher purchasing power: Higher purchasing power can contribute to demand-pull inflation. If people have more money to spend due to factors like wage increases or wealth accumulation, it can lead to increased demand for goods and services. Inflation-indexing wages: While inflation-indexing wages can contribute to a wage-price spiral in some cases, it's not necessarily a direct cause of demand-pull inflation. It can be a consequence of inflation rather than a primary driver. Rising interest rates: Rising interest rates generally act as a tool to cool down an economy and reduce inflation. They make borrowing more expensive and encourage saving, thereby reducing the money supply and aggregate demand. Therefore, the correct code is 1, 2, and 4.
The term 'West Texas Intermediate', sometimes found in news, refers to a grade of
* The term "West Texas Intermediate" (WTI), often seen in news reports, refers to a grade of crude oil. WTI is used as a benchmark for oil pricing in North America. * Specifically, WTI is a light, sweet crude oil, meaning it has a low density and low sulfur content. This makes it easier and more desirable to refine into gasoline and other products. WTI serves as one of the main benchmarks for oil prices globally. * West Texas Intermediate (WTI) and Brent Crude are two of the most important global benchmarks for crude oil prices. Brent Index is used as a benchmark for oil pricing globally, including Europe, Asia, and Africa.