IIP does not reflect real growth; change it: Adi Godrej

CII President-Designate and Chairman of the Godrej Group Adi B Godrej today called for changes in the Index of Industrial Production (IIP) saying that it overweighs slow-growing industries and underweighs the fast-growing ones.

When asked whether the IIP numbers for December, released today, showed that the slowdown is for real, he said, "...the real economy is doing quite well".

"I think some of the indices need to be changed because the IIP indices still have overweight of slow-growing industries and underweight of fast-growing industries", Godrej  said, adding that generally, the economy is doing well.

On reports that rural demand is slowing down, Godrej said: "In our businesses, we are seeing strong rural growth...  most of our consumer businesses, especially fast-moving consumer goods...strong rural growth."

Industrial production grew just 1.8 per cent year-on-year in December due to contraction in mining and capital goods sectors and lower manufacturing sector growth.

Factory output growth, as measured by the IIP, was at 8.1 per cent in December 2010.     

Manufacturing output, which constitutes over 75 per cent of the index, rose 1.8 per cent in December, compared to 8.7  per cent in the same month of 2010, according to the official data.