Don't get over influenced by single IIP number: Raghuram Ranjan

Chidambaram had seid yesterday he was very encouraged by indications of green shoots in economy in terms of production

Chief Economic Adviser Raghuram Rajan today cautioned that the government should not get too influenced by a sudden rebound in industrial output in October even as the economic growth appears to be stabilizing  The advice came a day after Finance Minister P Chidambaram described the IIP data as green shoots of recovery.

“We should not be overly influenced by one number because issues of base effects are there. We should take it as part of pattern,” Rajan told reporters at a press conference today.

 As per the data released by the government on Wednesday, the index of Industrial Production rose by a 16-month high of 8.2 per cent in October due to a low base effect of  5 per cent contraction a year ago and pick-up in demand during the festival season. IIP had contracted to 0.7 per cent in September, 2012.

Reacting to the numbers,  Chidambaram had said yesterday he was very encouraged by the indications of the green shoots in economy in terms of production.

Asked whether GDP growth, which stood at 5.5 per cent in April-June and slipped to 5.3 per cent in the July-September quarter taking the first half growth to 5.4 per cent against 7.3 per cent in the year ago period, would see revival in the second half of the year, Rajan said economic growth was stablising.

 “Certainly every move that government is trying to make (will) help strengthen growth,” he said at a press meet to announce the international conference on ‘Reviving Growth’ beginning Friday.

The Chief Economic Advisor said as the growth in the domestic economy would be influenced by developments in the US and the Eurozone countries, there was a need to tap into domestic sources of growth to drive the economy.

“Clearly India will be influenced by growth constraints in Europe. After all, our exports are part of the production. So If exports are declining as it has been recently, it will obviously going to have influence on the economy,” he said.

Exports in November contracted 4.17 per cent for the seventh month in a row to $22.2 billion due to slowdown in demand in the US and European markets.