The Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia expects the industrial production to grow much faster than the previous year and cited recovery as a result of the stimulus as a reason.

After the recently released government data showed a 11.7 per cent growth for production in November last year, he said “Industrial growth this year is going to be much better than last year, whether it will be 11.3 per cent for the next six months that is difficult to say.”

The IIP recorded a growth of just 2.6 per cent in 2008-09. The same for November 2009 was strong compared to the bleak 2.5 per cent recorded for same month previous year.

After the crisis in the global financial system triggered by the collapse of leading investment banker Lehman Brothers in September 2008, the government of India has injected Rs 1.86 lakh crore to help the industry cope with the downturn.

Mr. Ahluwalia gave the credit for economic recovery to the government stimulus plan and said, “We have been saying that concerted action taken by the government will lead to revival.”

However as the government is happy about the success of the stimulus plan, many are concerned about the timing of the withdrawal. The finance minister could tighten up monetary policy to control the huge fiscal deficit.

Many experts still express doubt if the recovery could be sustainable if the stimulus is withdrawn. While the government is in dilemma over the exit strategy for soups many agree that the Reserve Bank of India will raise the CRR in its policy review due this month end.

The growth for the overall Indian economy recorded a healthy 7.9 per cent for the second quarter of the fiscal year beating many estimates. Many say the real test will be the next six months as the economy will have to sustain the growth without the government stimulus.