Feb. 7: With an 8.1 per cent growth forecast, the government today raised a toast in Delhi to the conquest of the 10,000 peak in Mumbai yesterday.
The forecast revised the earlier estimate of 7.5 per cent for 2005-06 on a day the Bombay Stock Exchange sensitive index, or sensex, acclimatised itself to plus-10,000 heights by closing the day for the first time above that level, having touched the peak yesterday and then dropping below.
It moved to the day’s ' and all-time ' high of 10099.58 points before closing at 10082.28, up 101.86 on Monday’s close.
Happy economic tidings buoyed the government, which had struggled last week with the airport strike and the furore over voting with the US on Iran.
“It’s a heady mixture,” said finance minister P. Chidambaram on the double whammy. “The sensex reflects business confidence and strong fundamentals.”
Still, the government was not taking any chances. After a meeting with M. Damodaran, the head of the market watchdog Sebi, Chidambaram said: “As a minister, it is my duty to get a report from him and advise him to remain as vigilant as a regulator should be. I believe, he is vigilant.”
He also had a word of caution for investors. “Do your research and invest wisely. If you can’t, invest through mutual funds or other intermediaries.”
The higher growth forecast of 8.1 per cent, however, comes after last month’s change in the base year for calculating the gross domestic product to 1999-2000 from 1993-94.
“I do think the higher projections, too, are because of the change in the base year. The economy has not changed overnight,” said S.P. Gupta, former Planning Commission member.
The forecast is driven by the manufacturing sector, which accounts for a fourth of the GDP and is seen growing by 9.4 per cent, and services, by 8 per cent.
Agriculture, however, is forecast to expand by a modest 2.3 per cent, but still up from the 0.7 per cent recorded the year before.
In a poll of businessmen released today, the Confederation of Indian Industry said that some businesses had reported a growth of 20 per cent or above in April-December 2005.