Despite the dip in the Index of Industrial Production (IIP) in June, the country’s overall growth rate for the current fiscal will be better than last year, according to the Chairman of Economic Advisory Council to the Prime Minister C. Rangarajan.

He said industrial output will rise in the second half of the year, although there was a fall in the first half.

Industrial production dipped 1.8 per cent in June, led by a slowdown in the manufacturing sector, at a time when foreign institutions revised India’s growth outlook downward. The Index slipped 0.1 per cent in April-June period, against 6.9 per cent growth in the same period last fiscal.

Council to meet

Rangarajan said the Economic Advisory Council to the Prime Minister will meet in the next two weeks and come out with a re-assessed view on growth outlook. “But as of this moment, we expect the growth rate this year to be a shade better than last year (6.5 per cent). Also, IIP will show an increase in the second half of the year,” he told media persons on the sidelines of the first convocation of the Indian Institute of Technology, Hyderabad.

He said industrial output had slowed down in the second half of last fiscal, which reflected in the performance in the first half of this year.

Asked whether the Planning Commission may have to revise downwards the projected growth rate for the 12th Plan period, he said this fiscal being the first year of the Plan period, the Commission had to re-asses whether what ground was lost in the first year can be recovered in the next four years.

On foreign institutions such as Goldman Sachs and Moody’s revising downward the growth outlook, he said “they (the institutions) had taken a pessimistic view (on India’s growth outlook).”

He admitted that fiscal and current account deficits stood at high level, while growth had slowed and inflation remained high. “These issues need to be addressed, if we have to achieve a sustained high growth rate. However, these should not cloud the fact that over the seven year period beginning 2005-06, the average annual growth rate has been 8.3 per cent,” he said.