Disappointed over poor performance of industrial production, Planning Commission Deputy Chairman Montek Singh Ahluwalia on Friday said solution lies in demand generation through effective project execution and not by a stimulus.
“IIP numbers are disappointing… I don’t think, the solution is stimulus. In my view, there are a lot of these things to do with project implementation. That is not the result of stimulus,” Mr. Ahluwalia said when asked whether there is any case for a fiscal package for the industry.
The factory output measured in term of Index of Industrial Production (IIP), declined by 3.5 per cent in March, 2012, against an impressive growth of 9.4 per cent a year ago.
The IIP growth for the entire 2011-12 too was very low at 2.8 per cent as compared to 8.2 per cent in the previous fiscal.
On the eurozone crisis effects, he said, “I don’t think that you can link that to negative IIP. It is clearly an important factor which is depressing investment sentiment.”
Dr. Ahluwalia stressed on the need for a lot of measures at domestic front for removing supply side bottlenecks to revive the economy.
“I think for most of the revival, we have to focus on things that we need to do domestically to remove supply side problems. IIP numbers... point to urgency of trying to do more to get the economy back on track,” he added.