Dec IIP at 1.6%, experts call for capex to combat slowdown

The December IIP numbers have come inline with market expectations at 1.6% year on year, thus confirming a slowdown in the economy. However, CNBC-TV18 spoke to a couple of experts who said the slowdown is evident in the investment side but consumpttion has not fallen as much.

India should not be overly concerned about the slow pace of the country's industrial output growth in December as monthly figures do not necessarily indicate long-term trends, deputy head of the Planning Commission Montek Singh Ahluwalia said. "This high frequency IIP data is not necessarily an indication of the underlying trend." Reacting on the slowdown, Samiran Chakrabarty, Head of Research at Standard Chartered Bank said, "1.6% year-on-year is close to about 12% month-on-month jump in the index. So it is not that the industry has slowed down completely." While Sajjid Chinoy, Asia Economics from JPMorgan said, "I think the key worry here is inflation. If policy makers get too far behind the curve now, you might have to compromise a lot of growth later on and risk a hard landing." Talking about the capex cycle, Chinoy was of an opinion that events like growth in exports in the last two months indicate optimism but it is not enough. "You will have to see a big pick up in the capex cycle," added Chinoy. Agreeing with Chinoy, Chakrabarty said, "The capex cycle is currently being buffeted by a perfect storm of three kinds of risks