PMEAC expects improvement in IIP numbers in coming months

Rangarajan says we can still see manufacturing growth at 3-4% for the year

Encouraged by the turnaround in the manufacturing sector, Prime Minister's Economic Advisory Panel today said industrial output will show improvement in the coming months.

"IIP number indicates that there is some turnaround as far as the manufacturing sector is concerned. I expect the growth rate will further pick up in the coming months, and for the year as a whole, we can still see manufacturing growth at 3-4%," PMEAC Chairman C Rangarajan said.

Industrial growth, as measured by Index of Industrial Production (IIP), slowed to 2.7% in August from 3.4% in the corresponding period last year.

The manufacturing sector, which constitutes over 75% of the index, grew at slow rate of 2.9% in August as against 3.9% in the same month last year.

 

He said the pick up in IIP numbers would be mainly driven by increase in production as well as favourable base impact.

Rangarajan further said that the Reserve Bank will decide on its monetary policy actions after seeing the inflation figures for September.

"I think monetary policy will largely be determined by the behaviour of inflation. We are yet to see inflation figures for another month and that will indicate in what direction RBI will be moving," he said.

The RBI is scheduled to come out with its second quarter monetary policy on October 30 and the September inflation numbers are scheduled on Monday. WPI inflation in August stood at 7.55%.

As per the latest data, retail inflation moderated to 9.73% in September from 10.03% in August.

Commenting on the industrial output numbers, Rangarajan said there was some turnaround in the manufacturing sector.