Encouraged by turnaround in manufacturing sector, Prime Minister's Economic Advisory Panel said on Friday industrial output will show improvement in the coming months.
"IIP number do indicate that there is some turnaround as far as manufacturing sector is concerned. I do expect in coming months the growth rate will further pick up and year as a whole we can still see manufacturing growth at 3-4 per cent," PMEAC chairman C Rangarajan said.
Industrial growth, as measured by Index of Industrial Production slowed to 2.7 per cent in August, from 3.4 per cent in the corresponding period last year.
The manufacturing sector, which constitutes over 75 per cent of the index, grew at slow rate of 2.9 per cent in August, as against 3.9 per cent in the same month last year.
He said the pick up in the IIP numbers would be mainly driven by increase in production as well as favourable base impact.
Rangarajan further said that the Reserve Bank will decide on its monetary policy actions after seeing the inflation figures for September.
"I think monetary policy will largely be determined by behaviour of inflation. We are yet to see inflation figures for another month and that will indicate in what direction RBI will be moving," he said.
The Reserve Bank of India is scheduled to come out with its second quarter monetary policy on October 30 and the September inflation numbers are scheduled on Monday.
WPI inflation in August stood at 7.55 per cent.
As per the latest data, retail inflation moderated to 9.73 per cent in September, from 10.03 per cent in August.
Commenting on the industrial output numbers, Rangarajan said there was some turnaround in the manufacturing sector.