'Govt policies working, withdraw stimulus gradually'

Buoyed by over 17 per cent of industrial growth in April,the highest for 2010 so far, Planning Commission today said the government's policies were "working" and that it should continue with gradual withdrawal of stimulus.

"Let us just take a little bit of joy by the fact that the policy is working...Whatever the government is doing on fiscal policy, sectoral policy and promotion of positive attitude towards the investment has succeeded",the Planning Commission Deputy Chairman Montek Singh Ahluwalia said.

On withdrawal of stimulus, which was given to the industry to combat the impact of global financial crisis, he said, "it's going quite well. I don't think it needs to be swiftened".

Finance Ministry and Reserve Bank are working on gradual withdrawal of sops given to the industry to beat the economic crisis. Ahluwalia said he found nothing wrong with government positions and was sure that the situation would be managed in a sensible way.

The government stimulus into the economy has helped the Index of Industrial Production (IIP) pick up after it turned negative in October 2008 in consequence to the global financial crisis.

IPP, after staying in red for the inital few months in 2009, picked up pace and rose to a 20-year high of 17.7 per cent in December that year. Overall, IIP grew by 10.4 per cent for 2009-10.

Buoyed by 17.6 per cent growth in April, the highest in 2010, Ahluwalia hoped that fiscal 2010-11 would end with an annual double-digit industrial growth for second year in a row.

"It will be our effort in 2010-11 to see strong industrial growth. We are projecting 8.5 per cent GDP growth in (2010-11), that will definitely involve double digit IIP", he said.

When asked about country prospects of achieving higher than projected 8.5 per cent GDP growth, Ahluwalia said it was possible and would be led by several factors besides industry.