Chief Economic Adviser Arvind Virmani today said India's growth projections by international financial institutions are too low and asserted that industrial growth of 2.7 per cent in May is in line with the estimate of seven per cent this fiscal.
Industrial growth figure of 2.7 per cent in May is in line with seven per cent growth (plus-minus 0.75 per cent) for the current fiscal, projected by the Economic Survey with some riders, Virmani, the principal author of the pre-Budget document, said.
"Overall IIP growth is very much consistent and supportive of our projections...international financial institutions like World Bank and IMF are still way too low," Virmani said.
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Here is the picture of growth rate of IIP in the last 6 months-
Source: Indicus Analytics
Thanks to indicus for collecting all the data.
Clearly, the consumer demand has been driving the growth. The 2.7% growth in May is better than 1.4% in April.
But the real question is whether this is good enough.
I don't think so. An annual average of 7% might sound fine in this econopmic environment. But I don't think that we will be able to reach a two digit growth even in a boom period. This is a concern. The primary reason behind this gap is that India does not have the right infrastructure for efficient manufacturing. This is a fact that everyone realises.
The boost will come only when the govt creates the right infrastructure. Hence, I feel the massive spending that the govt has announced in the budget is a step in the right direction. These are policies aimed at achieving long term objectives. Thumbs
up to the UPA
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