Poor IIP: Strong investment key to recovery, says Montek

Expressing concerns over slowdown in industrial growth, the Planning Commission today said strong investment performance and improvement in infrastructure are key to recovery.

"Slowing down (of IIP) for last two three months is a matter of concern. We should watch it," Planning Commission Deputy Chairman Montek Singh Ahluwalia told reporters in New Delhi.

"I believe that the key to recovery is going to be strong investment performance in coming year and also good infrastructure performance."

Expressing dissatisfaction over the industrial output growth for the month of January, he said, "The IIP growth rate for January is little bit high higher (than December), but it is not as good as it should be."

The IIP growth slowed down to 3.7 per cent in January, 2011, compared to 16.8 per cent expansion in the year-ago period.

The industrial growth number for the month of December has been revised upward to 2.53 per cent from the provisional number of 1.6 per cent released earlier.

The factory output growth in November was steep lower at 3.6 per cent after it touched a high of 11 per cent in October this fiscal.

"I would not regard the slowing down of industrial production as permanent feature but it does reflect the fact that at the moment for past two or three month, the pace of industrial production is not what we wanted to be. But I hope it will improve", Ahluwalia said.

On the latest tsunami disaster in Japan, he said, "I just heard the news and I won't speculate. It is very difficult to say whether it will have impact for a year as whole or not, it is difficult to project."

Japan was hit by a massive earthquake measuring 8.9 in the Richter scale, resulting in massive tsunami waves.

Warnings have been sounded in far-flung areas of the Pacific Rim, including the Russian Far East, Australia and New Zealand. Ahluwalia also refrained from commenting on the increase in funds under the Member Parliament Local Area Development scheme.

Finance Minister Pranab Mukherjee on Friday announced in the Lok Sabha increasing fund allocation under MPLADS to Rs 5 crore (Rs 50 million) from existing Rs 2 crore (Rs 20 million) per annum.

The Plan panel was not in favour of increasing funds under MPLAD scheme and had argued that it can not be done because more funds are required for social sector schemes.