Sept. 12: Thirteen years ago, Mumbai was targeted for serial blasts to cripple the country’s business nerve centre.
As the first judgment came today in the blasts trial, the “failed” verdict on that attempt to set the economy back became evident with even greater strength, obvious though it has been in the country’s 8 per cent growth.
For the first time in over a decade, industrial growth shot up to 12.4 per cent in July. It’s a level not seen since May 1996.
The Bombay Stock Exchange, one of the targets of the serial blasts, ended the day on a cheerful note. After yesterday’s plunge, the sensex closed at 11660.79, up 110 points.
The sprightly growth rate was buoyed by healthy consumer spending on cars, TV sets and refrigerators, though food products notched up the highest growth of 26.8 per cent.
But there were some signs of concern as well. Analysts said the high growth would trigger inflation — a fear that has been articulated by the Reserve Bank of India in the annual report it released last month — and could trigger a spike in interest rates.
A rate tweak is on the cards as the RBI has indicated its intention to tame inflation and keep it within its forecast of 5 to 5.5 per cent for the fiscal year that ends in March 2007.
Wholesale price inflation is ruling at 5 per cent, at the lower end of the central bank’s estimate.
RBI governor Y.V. Reddy and his band of policymakers raised the benchmark short-term interest rate by 25 basis points to 6 per cent on July 25, its second increase in six weeks, as they tried to grapple with mounting price pressures.
Finance minister P. Chidambaram, however, said he did not see any pressure on interest rates despite the rapid industrial growth. “While credit growth is high, I don’t see (high industrial growth) necessarily exerting pressure on interest rates,” he said.