Planning Commission deputy chairperson Montek Singh Ahluwalia has hinted that there could be a marginal fall in growth in the second quarter, but expected the economy to clock growth between 8.5 to 9 per cent in the current financial year.
"We have been predicting a slightly lower growth and the latest industrial output numbers are no reason to reassess the growth estimate," Ahluwalia said on the sidelines of the commission's meeting on groundwater management here.
Ahluwalia said that the gross domestic product (GDP) growth was good in the first quarter, but indicated that a marginal fall in growth rates could be expected in the second quarter. "I would rather call it a moderation in growth rather than slowdown," he said.
Monetary tightening, an appreciating rupee and a possible higher base of the previous year have pulled down industrial growth to 7.1 per cent in July this year, from 13.2 per cent a year ago.
Economists and industry captains felt the spike was a manifestation of high cost of funds and said this could have adverse consequences on the overall economic growth rate.
The sluggishness was reflected across all sectors after the quick estimates of Index of Industrial Production (IIP) released last week showed that the manufacturing sector grew by 7.2 per cent during the month, compared with a sizzling 14.3 per cent in July 2006.
The economy grew at 9.3 per cent during April to June this year. GDP growth rode largely on robust performances by the manufacturing, construction and services sectors.
Ahluwalia, however, did not agree with the opinion that moderation of industrial growth was due to stringent monetary policies adopted by the Reserve Bank in the wake of the runway inflation.