India Can Still Grow At More Than 8 pct in FY12 - Adviser.

 NEW DELHI (Reuters) - India can still grow at more than 8 percent in this fiscal year as its industrial output growth data is "hugely underestimated", reflecting only partially the high growth seen in exports and small-scale sectors, a top government adviser said on Monday.

The index of industrial production (IIP) had slipped to 4.1 percent in August from a year ago.

"The entire exports growth is in the manufacturing sector. Two large items -- petroleum and engineering products -- are not reflected in the IIP data," Pronab Sen, principal adviser to Planning Commission, told Reuters.

"I am hopeful of 8 percent plus growth (in FY12)," Sen said, adding, the IIP data does not square with the exports data.

Asia's third-largest economy, which grew 7.7 percent in the June quarter from a year earlier, is widely expected to grow less than 8 percent in the current fiscal year to end-March, as a steady rise in interest rates has crimped domestic demand and as global economic outlook remains hazy.

"The initial news may be bad," Sen said referring to provisional industrial output data. "But eventually, the SME (small-and-medium enterprises) growth is going to be very strong."

He also said Tuesday's possible policy rate increase by the central bank would not immediately impact inflation, but would tamp down inflationary expectations over the next 3-5 months.

A dozen rate increases dealt by the RBI in the past 18 months to tamp down near double-digit inflation has hurt local businesses, which are rooting for a pause in policy tightening.

Indian exports rose 52 percent to $160 billion during the first six months of this fiscal year, despite turbulence in the United States and sovereign debt woes in the euro zone.

Engineering products exports more than doubled to $46.4 billion in first six months this fiscal, while petroleum and oil products growth rose 53 percent to $27 billion.

Source : moneycontrol.com