IIP fluctuation not to hit GDP projection, says Montek

Sticking to its projection of over 8.5 per cent GDP growth this fiscal, the Planning Commission on Friday said monthly variations in industrial output numbers should not be a cause of concern.

Growth in industrial output, as measured by the index of industrial production (IIP), slowed to 1.6 per cent in December, 2010, the lowest pace of expansion in the last 20 months.

“Month-to-month variation in IIP should not occupy us too much,” Planning Commission Deputy Chairman Mr Montek Singh Ahluwalia told reporters on the sidelines of an Indo-US Economic summit.

He said, “This high frequency IIP data is not necessarily an indication of an underlying trend.”

IIP expansion declined to 1.6 per cent in December, 2010, from 18 per cent in the same month of the previous year. The growth was also low at 2.7 per cent in November. However, industrial output grew in double digits in April, May, July and October, 2010.

“In the current year, the Planning Commission has said that GDP will grow at 8.5 per cent or maybe a little higher. That prediction remains,” Mr Ahluwalia added.

Asked about the impact of a slowdown in industrial growth on economic expansion this fiscal, he said, “In order to achieve 8.5 GDP growth, 8 per cent industrial growth for the whole year (2010-11) is enough.”

Despite low growth in two consecutive months, industrial production expansion during the April-December, 2010, period stood at 8.6 per cent.

The government has estimated economic growth for the current financial year at 8.6 per cent, as against 8 per cent a year ago.

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