The Government plans to set up a committee to examine the index of industrial production (IIP), Dr C. Rangarajan, said here on Thursday.
Commenting on the downward revision of the IIP growth estimates for January, the Chairman of the Prime Minister's Economic Advisory Council said that the numbers certainly indicate that the industrial production has not picked up.
However, he added that the overall growth of industrial production in the year will be close to only “what we indicated – around 3.8 per cent”.
Since the IIP numbers are collected from several sources, there was a need to “tighten the sources from which data are collected”, he said.
On the decision to raise excise duty and services taxes in this year's Budget, Dr Rangarajan said it was “appropriate”, adding, “Hard decisions are required in terms of creating the proper environment for industry to grow.”
According to him, if targets relating to public sector infrastructure areas such as coal, power, roads and railways are fulfilled, “then that itself will act as a stimulant for private investments”.
On whether the RBI should announce a rate cut in its April 17 credit policy, he said, “I don't think adjustment on interest alone will bring about the desired results. All that we really need to do is to push up the sentiment in the economy.”
The RBI should take the growth factor into account, but at the same time “we need to wait for what happens to inflation”.
In the next few days, another data point will be released which will indicate “whether the trend that was noticed earlier of decline in headline inflation continues”, said Dr Rangarajan.
It is important to watch out for what happens not only to headline inflation but also to the manufacturing inflation, he added.
“The trend noted in the manufacturing inflation will give us the idea as to what the RBI should do,” he explained.