Sluggish growth to continue next year: ICRIER's Acharya

Industrial output data in October saw a sharp de-growth of 5.1% compared to a growth of 1.9% in September due to poor capital expansion.

Shankar Acharya of Indian Council for Research on International Economic Relations (ICRIER) indicated that a slowdown in IIP was along expected lines. However, he seemed very worried about the lack of investment growth. "I expect sluggish growth to continue next year," he added.

Acharya further hopes the inflation numbers are consistent. There has been a loss of momentum in inflation, he pointed out.

Here is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying videos.

Q: The macro numbers have not been good, but how worried are you about where things are heading?

A: I am seriously worried. The IIP data has not come as a total surprise. A month ago, I was extremely worried about the way things were going, not just on growth and inflation, but particularly on investment. Now, growth in the Q2 slowed to below 7%.

Most worryingly, the latest index of industrial production yesterday, not only showed dip of -5% in industrial production, but also showed a 25% fall in capital goods production.

I am not only worried about the outlook for this fiscal year, which will be clearly below 7% growth, but I am also worried about continuation of sub-7% growth for two-four years ahead.

Q: A lot of people have been pointing that it's not so much about FY12. Here, the damage has been done. But, may be in fiscal year 2013, we are staring at close to 6% growth. The way commentators are talking about the investment cycle and lack of pickup, we are probably in it for a long haul. Do you agree with that assessment or is it being alarmist?

A: At this stage, it may be a trifle alarmist. One has to say that that