Decline in industrial production is bottoming out: C Rangarajan, PMEAC

In a chat with ET Now, C Rangarajan, Chairman, PMEAC, talks abhout the November IIP numbers and what can be expected from growth numbers in coming months. Excerpts:

ET Now: What is your reaction to the IIP number and how much impact do you think the base effect has had on it?

C Rangarajan: To some extent, it is disappointing. However, it appears that we are seeing a bottom of the decline in industrial production. We should see pickup particularly in the last quarter of the current fiscal. It is not necessarily the base effect because if we look at it in terms of the index of the previous month, it has come down. Therefore, the only thing that we can draw from these numbers is that the decline in production is bottoming out.

ET Now: Based on the numbers we are seeing, would you scale down your overall IIP growth number for FY13? Do you believe 6% growth is a number that the government ought not to be working with any longer?

C Rangarajan: The growth rate for the economy on a whole now would be between 5.5-6% or maybe around 5.7-5.8%. However, as far as pickup in the industrial production is concerned, for the second half of year, we could see around 5-6% which will give the growth rate of between 2.5-3% for the year.

Therefore, I would imagine that the full impact of the reversal in the investment sentiment that we have seen in the last few months will be seen in the next fiscal. I see a pickup in industrial production in the last quarter.