Economy to grow by 8.5% despite slowdown in IIP: Plan panel

Planning Commission today expressed confidence that the economy would grow by 8.5 per cent despite the industrial growth rate slipping to a 13-month low of 7.1 per cent in June.

"For year as whole it (Index of Industrial  Production) does not necessarily have be in double digit... To achieve 8.5 per cent GDP growth. But we do want double digit industrial growth", Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters.

IIP during June slipped to 7.1 per cent, from 8.3 per cent in the corresponding period last fiscal, mainly on account of deceleration in growth rates of manufacturing sector.

Both the Reserve Bank (RBI) and the Prime Minister's Economic Advisory Council (PMEAC) have projected the economic growth rate of 8.5 per cent for the current fiscal, up from 7.4 per cent a year ago.

Ahluwalia said, "The industrial growth in June is little bit lower...We did expect deceleration in industrial growth. I will not conclude from the June figure that this is going to be trend for rest of the year. A lot of individual components seems to be showing reasonably good growth."

Among the industrial segments, capital goods recorded a growth of 9.7 per cent in June, intermediate goods 8.7 per cent and consumer goods 8.3 per cent.

The grow in the year ago period for the three segments was 13.4 per cent, 7.9 per cent and 8.3 per cent respectively.