OFFICIAL STATISTICS SPECIALLY DESIGNED FOR INDIAN STATISTICAL SERVICE (ISS) AND OTHER GOVERNMENT & PRIVATE SECTOR STATISTICAL EXAMINATIONS
Get the complete book, written for ISS aspirants and every statistical exam that tests Indian official statistics.
Buy the book on Amazon.inIndex of Eight Core Industries (ICI) in India: The Complete Guide for ISS and Statistical Exams
When the news says "core sector growth slowed to 2% in the latest month," that number comes from the Index of Eight Core Industries (ICI). It is an early indicator of industrial activity, released before the IIP, and a regular in Indian Statistical Service (ISS) papers. It also shows up in RBI, NABARD, SSC and university statistics exams. Because it is often confused with the IIP, it is a favourite for tricky "who compiles it" questions. This guide gives you the concept, the method and three exam-style questions.
1. What is the Index of Eight Core Industries?
The ICI measures the combined and individual performance of eight key infrastructure industries: coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity. These industries supply basic inputs to the rest of the economy, so their output gives a quick signal of where industrial growth is heading.
Why examiners love this topic
ICI links index number theory, weighting and the relation between a sub-index and a bigger index. The eight industries make up about 40% of the weight of the IIP, so a question can ask you to connect the two.
2. Who compiles ICI in India and how?
The Office of the Economic Adviser (OEA), DPIIT, Ministry of Commerce and Industry compiles ICI, not MoSPI. It is released monthly, around the 20th of the following month, which is earlier than the IIP. The current series has 2011-12 as the base year. Production data come from source agencies such as the Ministry of Coal, the Ministry of Petroleum and Natural Gas, the Central Electricity Authority and the Ministry of Steel.
Coverage
Eight industries: Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity.
Weights
Taken from the IIP weights of these industries in the 2011-12 series, rescaled so that the ICI weights add up to 100.
Method
A Laspeyres-type quantity index, with fixed base-year weights, like the IIP.
Exam tip
ICI covers only eight industries, so it is a partial indicator. It is not the same as the IIP, and it is not compiled by MoSPI. A revision to a newer base is expected to follow the IIP base change, so check the latest OEA release before your exam.
3. The formula behind ICI
ICI is a Laspeyres-type quantity index: weights are fixed at the base period, and only production volumes change.
Here Ii is the production index of the i-th industry, Wi is its weight (the eight weights add up to 100), and Qi0, Qi1 are base and current production. Growth is the year-on-year percentage change in the index.
- Strength: quick, based on physical output data, and available about a month after the reference period.
- Weakness: it covers only eight industries, and fixed weights age over time, which is why the base is revised.
- Property to remember: it is a quantity (volume) index, not a price index.
4. ICI weights at a glance (Base 2011-12)
Notice that refinery products, electricity and steel together carry about two-thirds of the weight. This is why they drive the headline core growth number.
Weights are for the 2011-12 base series (total = 100). In the IIP, the eight industries together carry about 40.27% of the weight. Verify against the latest OEA release before quoting.
5. ICI vs IIP: the comparison that keeps coming up
| Basis | ICI | IIP |
|---|---|---|
| Compiled by | Office of the Economic Adviser, DPIIT | NSO, MoSPI |
| Coverage | Eight core industries only | Mining, manufacturing, electricity and other sectors |
| Release | Around the 20th of the next month | Around the 28th of the next month |
| Base year | 2011-12 | 2022-23 (new series) |
| Relation | The eight industries carry about 40% of the weight in the 2011-12 IIP, so ICI is a leading signal for IIP | |
6. Common mistakes students make
- Saying ICI is compiled by MoSPI. It is compiled by the Office of the Economic Adviser, DPIIT.
- Adding the eight weights to 40.27 or another number. Within ICI they add up to 100.
- Listing the wrong industries. Remember: coal, crude oil, natural gas, refinery products, fertilizers, steel, cement, electricity.
- Calling ICI a price index. It measures changes in production volume.
- Treating ICI as a substitute for IIP. It is a partial and earlier indicator.
7. Three important questions on ICI
Try each one on your own first, then tap the answer.
What does the Index of Eight Core Industries measure, and which industries does it cover?
Show answer
ICI measures the volume of production of eight key industries relative to a base period, using fixed base-year weights. The industries are coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity. It is compiled by the Office of the Economic Adviser, DPIIT.
The weights are: Coal 10.33, Crude Oil 8.98, Natural Gas 6.88, Refinery Products 28.04, Fertilizers 2.63, Steel 17.92, Cement 5.37, Electricity 19.85. For a month the industry indices are 180, 78, 92, 140, 125, 205, 190 and 210 respectively. Compute the ICI. If the index for the same month last year was 152.0, find the growth rate.
Show answer
ΣWiIi = 1859.40 + 700.44 + 632.96 + 3925.60 + 328.75 + 3673.60 + 1020.30 + 4168.50
= 16309.55
ΣWi = 100, so ICI = 16309.55 / 100 = 163.10 (approx.)
Growth rate = (163.10 − 152.0) / 152.0 × 100 = 7.3% (approx.) year on year.
Explain the relationship between the Index of Eight Core Industries and the Index of Industrial Production. Why is ICI released earlier, and what are its limitations?
Show answer
Write your answer in four parts. (a) Compilers and coverage: ICI is compiled by the Office of the Economic Adviser, DPIIT, and covers eight industries. IIP is compiled by NSO, MoSPI, and covers the whole of mining, manufacturing and electricity, with a much wider basket. (b) Relationship: the eight industries carry about 40% of the weight in the 2011-12 IIP, so movements in ICI usually signal the direction of IIP. (c) Timing: ICI depends on production data from a few large source agencies, which are available quickly, so it is released around the 20th, before the IIP. (d) Limitations: it leaves out many manufacturing industries such as textiles, machinery and consumer goods, its weights are fixed and ageing, and the two indices use different bases. Conclude that ICI is a useful early indicator but cannot replace the IIP.
Key takeaways
- ICI is a volume index of eight core industries, compiled monthly by the Office of the Economic Adviser, DPIIT.
- The current series has base year 2011-12, with refinery products, electricity and steel carrying about two-thirds of the weight.
- It follows the Laspeyres approach: fixed base-year weights, and the eight weights add up to 100.
- Know the ICI versus IIP comparison cold. It is a likely exam question this year.
Everything on Official Statistics, in one book
This topic is just one chapter of the syllabus. If you want the complete picture, this book is built for you.
- Indian official statistical system: MoSPI, NSO, NSC and the data they produce
- National accounts, GDP, IIP, price indices and labour statistics
- NSS surveys, sampling designs and data quality concepts
- Written specially for the ISS exam, and useful for other government and private sector statistical exams
- Concept-focused notes to revise quickly before the exam
Official Statistics for ISS and other Government & Private Sector Statistical Examinations