Index of Industrial Production

IIP
Index Of Industrial Production

1. INDEX OF INDUSTRIAL PRODUCTION BY A.S.L.MANASA SOURAV BISWAS Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

2. AGENDA INTRODUCTION CALCULATION CLASSIFICATION OF INDUSTRIES FACTS AND FIGURES IMPACT OF IIP ON INDIAN ECONOMY FUTURE OUTLOOK USES OF IIP PROBLEMS WITH IIP Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

3. INTRODUCTION Definition of IIP : IIP is a number which tells about how industries are performing over a period of time Calculated by Center for Statistical Operations (CSO) Commenced in 1937 Recently revised in 2004-2005 It is the leading indicator of economic growth Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

4. CALCULATION OF IIP It is calculated using LASPEYERS formula IIP = ∑ ( W1 * R1 ) ∑ W1 Where, R1 = P1 X 100 P0 W1 = Base year weights P1 = Production in current year P0 = Production in base year Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

5. COMPONENTS OF IIP CLASSIFICATION CONSUMER DURABLES CONSUMER NON DURABLES Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

6. Contd…… CSO gets data from Manufacturing : Dept. of Industrial Policy & Promotion Electricity : Central Electric Authority Mining : Indian Bureau of Mining ( Nagpur ) Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

7. USES OF IIP By central govt. for planning and decision making Predicts future turning points of business cycles Investors can assess the impact of economy on their overall portfolio Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

8. PROBLEMS WITH IIP LASPEYERS formula have following draw backs Subsequent change in weights is not accounted Change in quality of goods is not considered Addition of new goods is not accounted till the next revision Substitution effect is not considered Data collection Problem : Data from unorganized sectors is difficult to obtain No standardized data collection & production techniques Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

9. FACTS AND FIGURES Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

10. IMPACT OF IIP ON INDIAN ECONOMY Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

11. FUTURE OUTLOOK Its dependent on following factors : Fed Reserve decision on QE3 Stabilization of Chinese economy Early resolution of EU crisis ( Highly unlikely ) Rupee stabilization Domestic demand Government policies Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

12. CONCLUSION Low IIP values have direct effect on stock prices L ower employment F undamentally strong stocks becomes undervalued FIIs starts pulling out money from Indian stock-market Rupee depreciates with respect to USD Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

13. Contd…. Growth in IIP numbers are good signs for cement and steel industries Have a positive impact on the banking sector Lower supply coupled with lower demand can have catastrophic impact on stock market and was one of the main reasons for drop in Sensex from 20000 to 8000 in 2008 . Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082

14. THANK YOU Submitted to : RVM Finishing School & Consultancy www.rvmfinishingschool.com 9550812082