Red-Hot Industry Reinforces Rate View

BMI View: Indian industry is on fire, with output growth posting a remarkable 16.8% y-o-y in December 2009, the fastest rate of expansion in two decades. While base effects and seasonal factors have played a part, upside risks to our FY2009/10 (April-March) real GDP forecast of 7.0% are building. Moreover, the threat of further inflationary pressure could tempt the Reserve Bank of India (RBI) to deliver an inter-meeting repo rate hike before it next convenes on April 20, in line with our expectations.

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