Montek pegs India's growth at 8.5%

Pinning hopes on smart recovery in the farm output, the Planning Commission on Monday exuded confidence that the country would clock over 8.5 per cent economic expansion in 2010-11 despite moderation in industrial growth.

According to Planning Commission Deputy Chairman Montek Singh Ahluwalia, more than the anticipated growth in the farm sector will make up for the shortfall in the industrial output.

"Yes, it will be because I think agriculture growth will be higher than the earlier forecast (of 5.4 per cent).

I don't think that (industrial growth below 8 per cent level) will make a difference," he said when asked if the current level of industrial growth will be sufficient to achieve the projected 8.5 per cent GDP growth for 2010-11.

The Central Statistical Organization's advance estimates indicate that agriculture and allied sectors are expected to grow at 5.4 per cent in 2010-11 compared to 0.4 per cent in the previous fiscal. It has also pegged the economic expansion at 8.6 per cent in 2010-11.

Earlier, Ahluwalia had said that an annual industrial growth of 8-9 per cent was necessary to achieve the targetted economy growth.

As per the provisional data released here, index of industrial production has grown by 7.8 per cent during April-February period in 2010-11 compared to 10 per cent in the same period in the previous fiscal.

The industrial growth has been showing a steady declining trend since it peaked at 15.08 per cent in July.

The IIP number slipped to 6.9 per cent in August and 4.4 per cent in September.

Some ray of hope was seen when the IIP growth crossed 11 per cent in the month of October.

But after that it has declined significantly.

The industry grew by 3.6 per cent in November and 2.53 per cent in December.

Despite the marginal recovery in January and February with IIP growth at 3.9 and 3.7 per cent, respectively, there have been fears that annual industrial growth may lag behind the target and drag the economic growth.

But now the unexpected spurt in farm production may fill for the gap created by slow industrial activity.

Meanwhile, Ahluwalia has expressed hope that industry would record a robust growth of 9 per cent during the current fiscal.

"In 2011-12 we can get growth rate of industry, which is something of the order of 9 per cent or so," he added.

On farm sector growth, Ahluwalia said, "It is not possible to repeat the agriculture growth rate (of 5.4 per cent of last fiscal) in 2011-12, as you will be seeing a base level effect also."

Image: Montek Singh Ahluwalia