In an exclusive interview to NDTV Profit, Planning Commission Deputy Chairman Montek Singh Ahluwalia says the economy is poised for stronger growth in the coming months. He adds that there is no merit in the government holding equity in excess of 51 per cent and the excess money should be used for infrastructure development.

Here's the complete transcript. Don’t miss the accompanying video.

Your first reaction to the November Index of Industrial Production (IIP) numbers, which has surprised the street?
 

Well, I would not call them surprise. I think they simply indicate the fact that when you get a bit of a slowdown that slowdown does come to an end and I think it does indicate that perhaps the downward movement that was witnessed earlier had bottomed out. I hope we are now better poised for stronger growths in the months ahead.

So, would you say the manufacturing sector has hit a significant bottom in the month of October and we can look forward to better times from here?
 

I hope so. I mean in these matters, one of the problems with the IIP numbers is that there is a lot of month to month volatility. So, I think… I will certainly like to see what the next month's numbers are like but certainly the ones that have just come out do suggest that the earlier very negative assessment was perhaps an exaggeration.

Now, it is true that capital goods still remains a problem and I think that probably reflects the fact that investment activity remains a bit slow. So, personally I am glad that the numbers have improved. I think we want to watch what’s happening on capital goods and as soon as those numbers also show an improvement, I think we can say that the economy has bottomed down.

What's causing the volatility according to you? One month we get a -5 per cent print… next month +6 per cent?
 

Well, you know I think I don't know enough about it but I believe the National Statistical Commission is looking into some of the data infirmities. You know a lot of these data were collected at the time when month to month variation was not regarded as very important. I mean these things were looked at over very long periods.

Increasingly, as the economy is gaining focus of many people and also as the attentions span is focussed on what happened last week what happened last month. You just need much better quality data to make these I would call more frequently reported numbers reliable. We just have to improve the data enormously.

There is lot of reports about the entire divestment process -from buybacks to cross holdings- differences between ministries, etc. Where does the Planning Commission stand on this?
 

Well… Look, I think on the divestment process in general which means selling shares of public sector enterprises to the public, we remain completely supportive of it but we do recognise the markets are temporarily very depressed. A judgement has to be made whether it is better to divest now or wait a little bit.

So, I don’t think there is any change of view in the Planning Commission on that point. I mean a lot of the public attention has been focussed on possible proposals. I mean no such thing has actually come for decision to the cabinet so far.

There have been some thought been given to facilitating companies in the public sector buying shares of public sector. You know, when you look at those proposals…what they are claiming  is that this is only extending to public sector companies…the facility that private sector companies already have which is if they wish to use their surpluses to buy financial instruments including their own shares back from the market, they should be allowed to do so.

So, I think to that extent, it’s meant to be a facilitating device. Now, whether public sector companies want to do it or should do it, that's really for the public sector companies to determine.

My own view is surpluses with public  sector companies…particularly since these are mainly in the  energy sector…would be much better use to expand  investment and capacity in the energy sectors  but I don't think there is any compulsion  that was proposed to be put  on these companies.

Disinvestment is more of a strategic issue so why look at market conditions while doing it?
 

Well, I think that you can argue that there is a case for divesting right after 51 per cent because you retain as much strategic value as you like but you are really cashing in on the 49 per cent shareholding which you can use to create other assets…like hospitals and schools and whatever you want.

So, I think the case for divestment is quite independent of strategic involvement of a new investor. That's a separate issue.

I think there is a case for government simply saying there is no merit in holding government equity in excess of 51 per cent because we can use the money to do other things. I mean that's what the whole strategy of disinvestment has been for quite a long time so anyone who questions it now is questioning something that's been in place for several years.

6. The fiscal deficit target of 4.6 per cent is beyond us right now. What's the government doing to minimize it over the next 2 and half months?
 

Montek Singh Ahluwalia:  I think at this stage when we are getting very close to the budget. Statements about what the government is going to manage the budgetary situation have to come from the Ministry of Finance.

So, I have been telling everybody that as of now I don’t propose to make any comment on what the fiscal deficit will be or how it will be managed. This is really for the finance ministry now to look at.

There are also reports suggesting that the government has asked PSUs to step up investments spending and diversify into related areas?
 

I mean that’s not a question. Our whole strategy is to cause an investment revival. It’s very important that energy supplies should be increased. Investment therefore in anything that increases energy capacity or the ability to deliver energy is a good thing and certainly I think cash surplus PSU’s in the energy sector ought to be using it to find ways to invest and expand in energy.

But that's not a recent phenomenon…may be somebody held a meeting recently and you picked it up. This has been our strategy for quite some time.

The government has asked oil PSUs to buy as little oil as possible from Iran. Is it a financial decision or a political one?
 

I am not actually aware of those discussions so I just don't know what has transpired there.

So, do you want oil refiners to buy as much oil as possible from Iran considering that it might be cheaper than others?
 

Well, you know as a general rule…as an energy importer...It should always be  our objective to diversify energy supplies and to strengthen all methods to access to oil and gas wherever we can and I am assuming that's the strategy  that we are following.