Growth deceleration has bottomed out: Montek

But it cannot be said with certainty whether growth has started accelerating

Planning Commission Deputy Chairman Montek Singh Ahluwalia today said deceleration in growth had bottomed out.

Even as the eight core sector industries showed signs of a recovery in industrial production in September, Ahluwalia said it wasn’t certain whether economic expansion had started accelerating, as the government’s recent steps to revive sentiment would yield results only from January. “In the first quarter of this financial year, GDP (gross domestic product) growth was 5.5 per cent, while in last quarter of the last financial year, it was 5.3 per cent. So, it can be said deceleration in growth has bottomed out,” he said on the sidelines of the Confederation of Indian Industry’s Invest North Summit.

In 2011-12, the Indian economy expanded 6.5 per cent, a nine-year low, primarily owing to GDP growth of only 5.3 per cent in the last quarter.

In September, annual growth in the eight core sector industries more-than-doubled to a seven-month high of 5.1 per cent, owing to good production in the coal, cement and petroleum refinery sectors. Showing signs of a turnaround, the Index of Industrial Production grew 2.7 per cent in August, reversing the trend of contraction seen in the previous two months.

Recently, the government had allowed up to 51 per cent foreign direct investment (FDI) in the multi-brand retail sector. It had also relaxed norms for 100 per cent FDI in the single-brand retail segment, besides taking a slew of steps to rein in the government’s fiscal deficit. “Most of the action the government of India has taken on reforms would show results by January,” Ahluwalia said.

On the oft-repeated allegations of delay in decision-making harming growth prospects, he said now, officials were extra cautious and wary of quick decision-making, and this was harming growth. “The central government is trying its best to remove delays in decision-making and the private sector should effectively help the government in this,” he said.

Power was an essential component of growth and the government hoped to address all issues related to coal linkages and fuel supply to power plants by the end of this year, he added.

Ahluwalia also said the recent decision to roll back the rise in prices of non-subsidised liquefied petroleum gas (LPG) cylinders wouldn’t stall the ongoing reform momentum. On Thursday, hours after raising the price of non-subsidised LPG by Rs 26.50 a cylinder, it had put the decision on hold.