2018-CGS-29: Mains Revision-17: Secondary Sector of Economy

  • India’s indigenous industry should fight much more pressing challenges. India has high incidences of diabetes and cancer. To address the challenges NPPA must create an enabling environment to ensure that we have improved drugs, innovative devices and timely access to healthcare, irrespective of who the provider is.
  • The cost-containment approach of policies that focus on static efficiency may produce favourable outcomes in the short term, but have an overall adverse effect on the innovation potential of the industry. Striking the right balance in regulation for healthcare must be priority for NPPA. [Mint]

 IIP and PMI

There are two key parameters that the government and private sector analysts use to gauge the level of activity in the manufacturing sector. They are

  • The Index of Industrial Production (IIP)
  • The Manufacturing Purchasing Managers’ Index (PMI).

Difference between IIP and PMI

  • PMI is a private sector survey while the IIP is gauged by the government.
  • The IIP is a measure of output. PMI measures activity at the purchasing or input stage.

How PMI is measured?

PMI is based on the survey which includes

  • The Nikkei India Manufacturing PMI is based on data compiled from monthly survey responses by purchasing managers in more than 400 manufacturing companies.
  • The manufacturing sector is divided into eight broad categories — basic metals, chemicals and plastics, electrical and optical, food and drink, mechanical engineering, textiles and clothing, timber and paper and transport.
  • The survey responses reflect month-to-month changes based on the data collected mid-month.
  • Based on the responses the PMI is calculated with the weightage under 5 indices-  new orders (weightage 0.3), output (0.25), employment (0.2), suppliers’ delivery times (0.15), stock of items purchased (0.1) and the delivery times index inverted so that it moves in a comparable direction.
  • A score above 50 denotes expansion while one below 50 signifies contraction.

How IIP is measured?

Index of Industrial Production (IIP) measures the quantum of changes in the industrial production in an economy and captures the general level of industrial activity in the country.

  • It is a composite indicator expressed in terms of an index number which measures the short term changes in the volume of production of a basket of industrial products during a given period with respect to the base period.
  • The base year is always given a value of 100. The current base year for the IIP series in India is 2011-12
  • Index of Industrial Production is compiled and published every month by Central Statistics Office (CSO) of the Ministry of Statistics and Programme Implementation with a time lag of six weeks from the reference month.
  • Industrial production for the purpose of IIP is divided into three sectors, i.e, Mining, Manufacturing and Electricity.

As with the IIP, the PMI suffers from the lacuna of not measuring informal sector activity. PMI is also susceptible to sampling errors, errors in assigning weights to various indicators and errors that creep in due to inaccurate responses. One important advantage the PMI has over the IIP is how quickly the data for any reporting period comes out. [The Hindu]

Fixed Term Employment

Fixed-term employment is a contract in which a company or an enterprise hires an employee for a specific period of time.


  • In most case it is for a year but can be renewed after the term expires depending on the requirement.
  • In a fixed-term employment, the employee is not on the payroll of the company.
  • The services of workmanwill be automatically terminated as a result of non renewal of the contract between the employer and the workman concerne
  • A separation of service of a workman as a result of non renewal of the contract of employment between the employer and workman concerned shall not be construed as termination of employment.
  • Worker would not be entitled to any notice or pay in lieu of that, if his services are terminated or in case of non-renewable of contract or expiry of term of

Current scenario

The fixed term employment was introduced in apparel manufacturing sector in Industrial Employment (Standing Order) Act in October, 2016. The government has extended the facility of hiring workers on fixed term employment to all sectors for improving the ease of doing business for players intending to hire people for completing specified projects, tasks or orders through an amendment. The amendment also provides for

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