Disappointed with the factory output growth of 4.1 per cent in August, the Finance Minister, Mr Pranab Mukherjee, has said that it may impact India’s second (July-September) quarter GDP.

“It (IIP) is not encouraging. It is a bit disappointing and it may affect the GDP of second quarter,” he told reporters here.

The factory output, as measured by the Index of Industrial production (IIP), was 4.1 per cent in August, lower than 4.5 per cent in the same month last year.

Mr Pranab Mukherjee, however, declined to comment on the extent to which the subdued IIP numbers will impact the economic growth during the July-September quarter (Q2) of this fiscal.

“To what extent it (slowdown in IIP) would affect, it would be premature to make any assessment,” he added.

India’s economic growth fell to an 18-month low of 7.7 per cent in the April-June period (Q1). The government expects the country to grow around 8.5 per cent during 2011-12.

As per the official data released today, the IIP growth during April-August stood at 5.6 per cent against 8.7 per cent in the corresponding period of 2010-11. However, July IIP growth has been revised upwards from 3.3 per cent to 3.8 per cent.

“The silver lining is that IIP has improved from July figure... But compared to the corresponding period of previous year, it is quite low,” Mr Pranab Mukherjee added.

Meanwhile, the Economic Affairs Secretary, Mr R. Gopalan, said that the slowdown in the IIP numbers is a matter of concern but expressed confidence that the figures would improve from here.

“It is a cause of concern. But as we go along, if you see the previous year, always second half IIP numbers have been good,” he said.

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