The Reserve Bank of India on Thursday expressed doubts over the efficacy of industrial growth data in mirroring the ground reality.
Incidentally, the central bank's comments come within weeks of economists raising doubts about the first quarter GDP data, where the government admitted to floundering.
"Although the year-on-year growth rate for the first four months of the year remains robust at 11.4 per cent, the high volatility over the past two months raises some doubts about how effectively the index reflects the underlying momentum in the industrial sector," RBI said in its first mid-quarterly review.
The data on the Index of Industrial Production showed that industrial growth accelerated to 13.8 per cent in July from 7.2 per cent a year ago, belying all expectations of slowdown.
RBI described the data as volatile since the previous month it was just 7.1 per cent, which was further revised down to 5.6 per cent, analysts said.
The comments by RBI also assume importance, since the Government itself committed a blunder while computing GDP data from the demand side, and revised it by around three times, a day after.
The economic growth numbers at market prices was, on September one, revised to 10.02 per cent for the quarter ending June 2010, from 3.65 per cent released on August 31.
Describing the economic growth as steady, RBI remained bullish on the other two sectors of the economy.
"Growth prospects in agriculture have clearly been boosted by the monsoon which...will also contribute to a good rabi harvest. Virtually all leading indicators of service sector activity point to sustained growth," RBI said.
The government has set a target of 8.5 per cent gross domestic product growth for this fiscal. During the first quarter, economy registered a growth of 8.8 per cent.
The RBI on Thursday raised key policy rates by up to 50 basis points for the fifth time this year, saying the action is aimed at easing inflation without hurting growth.
On global growth, RBI said it continues to be a cause for action, though the big picture has not worsened significantly since July, the time of its previous policy review.
