Press Information Bureau

Government of India

Ministry of Finance

12-May-2011

Union Finance Minister Shri Pranab Mukherjee said that the comforting news on the inflation front with food inflation moderating from 8.53 per cent to 7.70 per cent in the week ending April 30th, 2011 is matched by a turn-around in Index of Industrial Production (IIP) for March 2011. Shri Mukherjee said that after 4 months of slow growth, the industrial sector in March grew by 7.3 per cent and, within the industrial sector, the manufacturing sector with a weight of almost 80 per cent grew by 7.9 per cent. Union Finance Minister Shri Pranab Mukherjee said that there is also a revival in the growth of capital goods with the Index recording a growth of 12.9 per cent after 3 months of negative growth.

Union Finance Minister Shri Pranab Mukherjee said that these weekly and monthly cycles of bad and good news must be treated without over reaction. The good news that we have got this week both on the prices front and on industrial production must not be over-interpreted, just as we must not get overly pessimistic when the economy does badly during a week or month.

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(Release ID :72103)

 

Inflation moderation and industrial recovery should be met with measured policy response, avoiding overreaction to short-term data to ensure stability. Finance Minister reported moderation in food inflation and a turnaround in the Index of Industrial Production, led by manufacturing and capital goods recovery. He urged that short-term fluctuations in price and production data be met with a measured policy response and cautioned against over-interpreting weekly or monthly changes or reacting disproportionately to transient indicators.