Poor IIP fails to dampen CMIE’s hopes on growth

Oct 14, 2010 |

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Oct. 14: The Indian economy is expected to grow by 9.2 per cent in 2010-11 following impressive growth in the manufacturing and services sectors, Centre for Monitoring Indian Economy (CMIE) said here.

“We maintain that the Indian economy will grow by 9.2 per cent in 2010-11, as we expect impressive growth in the manufacturing and services sectors as well,” CMIE said in a statement. The Index of Industrial Production (IIP) dropped dramatically to 5.6 per cent in August, after growing by 13.8 per cent in July. It had recorded a growth of 11.2 per cent in the June quarter, but we believe that the growth was much higher than 11.2 per cent, CMIE said.

This is because sales revenues of the manufacturing companies rose by 23.8 per cent, while the rate of inflation in manufactured products (including petroleum products) was 8.2 per cent, implying that sales volumes grew by about 14.4 per cent.

The IIP has a very old base year (1993-94), outdated weights and a fixed frame of products and companies, and had miscalculated industrial growth for the preceding two years (2008-09 and 2009-10) as well. It is therefore imperative that the index is corrected at the earliest to enable meaningful analysis, CMIE said.

In August, the rate of inflation touched a six-month low of 8.5 per cent. It was calculated as per the new series released on 14 September with 2004-05 as the base year.

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