Need to see Feb IIP data to conclude downturn has ended: Montek Singh Ahluwalia

NEW DELHI: Expressing satisfaction over surge in industrial growth in January, Plan panel Deputy Chairman Montek Singh Ahluwalia today said one has to wait for February data before concluding that downturn is over.

"One month data is not enough to give firm conclusion. If it continues in next month, that indicates that the economy is now ready to move back to more normal growth rate for the economy as a whole," Ahluwalia told reporters.

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The factory output growth, measured in terms of Index of Industrial Production (IIP), rebounded to 6.8 per cent in January this year compared to 2.5 per cent in December. However it was higher at 7.5 per cent in January last year.

" IIP data has moved up pretty close to 7 per cent, is a good development. Our feeling is that we may end up with 7 per cent (economic growth) this fiscal," Ahluwalia said.

"If it looks like the downturn has come to an end then we should certainly do better than 7 per cent (economic growth) next fiscal," he added.

Last month, the Central Statistical Organisation (CSO) had estimated that the economy would grow at a slower pace of 6.9 per cent this fiscal, as against 8.4 per cent in 2010-11.

On the Reserve Bank's move to cut Cash Reserve Ratio (CRR) on Friday, Ahluwalia said, "I think CRR cut is good idea because there was tight liquidity. Frankly, it was very widely expected."

He added, "I think monetary policy should not be held to particular dates. I think when you feel something necessary, you should do it."

The apex bank in a surprise move had slashed Cash Reserve Ratio (CRR) from 5.5 per cent to 4.75 per cent on Friday, to infuse Rs 48,000 crore to ease the liquidity crunch in the financial system.

RBI had last reduced CRR by 0.5 percentage point on January 24 as well, injecting Rs 32,000 crore into the system.

The central bank will come out with its mid-quarterly review of the monetary policy on Thursday.