Q1 GDP data published today were strong. Private sector spending will probably ensure that the economy continues to expand at an 8-9% pace in coming quarters, even as stimulatory policies are withdrawn. The Reserve Bank (RBI) appears too concerned about the external threats to the upswing and should focus more on the risk that local inflation stays too high. Another hike in policy rates looks certain at the late July RBI review, and the chance of an earlier move remains significant as well.