IIP fluctuation not to hit over 8.5% GDP projection: Montek

IIP fluctuation not to hit over 8.5% GDP projection: Montek

New Delhi: Sticking to its projection of over 8.5% 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% 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 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% in December, 2010, from 18% in the same month of the previous year. The growth was also low at 2.7% 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% or maybe a little higher. That prediction remains," 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% 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%.

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