Slowdown over, growth recovery in 6 months: Montek

Mumbai: The economy will turn the corner in the next six months as the deceleration of the past several quarters has been arrested, Planning Commission Deputy Chairman Montek Singh Ahluwalia said on Monday. "It is our hope that in the second half of the year, which has begun just now, many of the measures taken by the government in the recent past to revive investor confidence will lead to a turnaround setting in the second half," Ahluwalia said while addressing a banking summit organised in Mumbai by Yes Bank and Financial Times.

Confident of better GDP numbers in the second half, Montek said, "In the first six months of the current year, GDP growth is around 5.5 per cent…and I think the second half will be better. Somewhere around 6 (per cent) is a reasonable basis to start working from. It could be a little better, it could be a little worse."

Basing his optimism to the pick-up in the August IIP numbers as also in the recent PMI surveys, Ahluwalia said there are signals of an up-tick. "We have two signals already, the industrial production index appears to have gone up a little in August and PMI is doing a little bit better," he said.

"I am using that as a touchstone… The government is back in action. Therefore I am willing to interpret the slight up-tick in the industrial production index as an example of deceleration having been arrested. I am not actually saying that resurgence has begun, but what we have done (policy actions) the impact will be delayed," Ahluwalia said.

After languishing for many months, the factory output numbers for August showed growth at 2.7 per cent, but the April-August IIP remains almost flat at 0.4 per cent against 5.6 per cent in the year ago period. The IIP readings were low due to the poor show by the manufacturing sector and contraction in capital goods output.