Due to heavy selling pressure from foreign funds, particularly hedge funds, the rupee tumbled to a three-year low of 46.57 per dollar before closing at 46.35 per dollar.
CSO data showed that in the January-March quarter, the economy grew by an extremely healthy 9.3 per cent. India is now a $700-billion economy.
Finance Minister P Chidambaram was ecstatic. “India needs more reform and foreign investment to sustain high economic growth,” he said. “The country is in a growth path of 8 per cent. This growth is a matter of satisfaction. If global prices rise and if it's reflected in domestic prices, it may impact inflation but not growth.”
He said he would meet the prime minister and discuss the issue of more reform in the mining and electricity sectors. “Foreign capital goes to countries where there is structural reform, legal reform and administrative reform,” he said.
Economists, however, said India needed to work harder to sustain growth.
Former RBI governor Bimal Jalan told HT: “These figures are most encouraging and welcome but we need to work harder to sustain it. The Sensex is an indicator and serves us a timely warning. That's why consistency is critical.”