India to grow at 8.5% in FY'11 despite poor IIP data

New Delhi (PTI) - Pinning hopes on smart recovery
in the farm output, the Planning Commission of India Monday
exuded confidence that the country would clock over 8.5 per
cent economic expansion in 2010-11 despite moderation in
industrial growth.
According to Planning Commission Deputy Chairman Montek
Singh Ahluwalia, more than the anticipated growth in the farm
sector will make up for the shortfall in the industrial
output.
"Yes, it will be because I think agriculture growth will
be higher than the earlier forecast (of 5.4 per cent). I don't
think that (industrial growth below 8 per cent level) will
make a difference," he said when asked if the current level of
industrial growth will be sufficient to achieve the projected
8.5 per cent GDP growth for 2010-11.
The Central Statistical Organization's advance estimates
indicate that agriculture and allied sectors are expected to
grow at 5.4 per cent in 2010-11 compared to 0.4 per cent in
the previous fiscal. It has also pegged the economic expansion
at 8.6 per cent in 2010-11.
Earlier, Ahluwalia had said that an annual industrial
growth of 8-9 per cent was necessary to achieve the targetted
economy growth.
As per the provisional data released here, index of
industrial production (IIP) has grown by 7.8 per cent during
April-February period in 2010-11 compared to 10 per cent in
the same period in the previous fiscal.
The industrial growth has been showing a steady declining
trend since it peaked at 15.08 per cent in July.
The IIP number slipped to 6.9 per cent in August and 4.4
per cent in September. Some ray of hope was seen when the IIP
growth crossed 11 per cent in the month of October. But after
that it has declined significantly.
The industry grew by 3.6 per cent in November and 2.53
per cent in December. Despite the marginal recovery in January
and February with IIP growth at 3.9 and 3.7 per cent,
respectively, there have been fears that annual industrial
growth may lag behind the target and drag the economic growth.
But now the unexpected spurt in farm production may fill
for the gap created by slow industrial activity.
Meanwhile, Ahluwalia has expressed hope that industry
would record a robust growth of 9 per cent during the current
fiscal.
"In 2011-12 we can get growth rate of industry, which
is something of the order of 9 per cent or so," he added.
On farm sector growth, Ahluwalia said, "It is not
possible to repeat the agriculture growth rate (of 5.4 per
cent of last fiscal) in 2011-12, as you will be seeing a base
level effect also."