Jan IIP at 16.7%: How warranted is the sense of optimism?

Excerpts from India Tonight on CNBC-TV18 Watch the full show » RELATED NEWS Is India getting into a new paradigm of growth? IIP to be double-digits for several months: HSBC Jan IIP growth at 16.7% vs 1% (YoY); RBI action inevitable

The January figures for industrial growth coming on top of December's heart-warming numbers have fuelled the belief that the economy is on the path of fast recovery. But how warranted is that sense of confidence and optimism? Does apprehension of inflation detract from it, particularly now the Dr Rangarajan's claim inflation won't touch double digits seems blatantly incorrect?

In an exclusive interview with CNBC-TV18, Former Chief Economic Advisor to the Government Shankar Acharya; Planning Commission Member, Arun Maira and the Chairman of Hero Corporate Services, Sunil Kant Munjal, discuss the issue.

Below is a verbatim transcript of the exclusive interview on CNBC-TV18. Also watch the accompanying video.

Q: Starting with the industrial production figure for January and at 16.7% it's marginally below the figure for December of 16.8% and perhaps 1% below the revised figure of 17.6%. So how do you view the January performance?

Acharya: It's unquestionably very good. Basically what it means is that over the last few months industrial growth has been picking up. For the full year, for 2009-10, industrial growth in value added terms, I would expect in double digits, so that's all for the good.

I would worry about the inflation thing because that too is now in double digits, as we know from the February data which says 9.89% or something like that, but we know when it will be revised it will be in double digits.