Poor monsoon will not derail India’s recovery

Strong June industrial output adds to the evidence that India’s recovery will be sustained and probably rapid. The poor 2009 monsoon is a wildcard but, at worst, GDP growth this year should only be 0.5- 1.0 percentage points lower than would otherwise have been the case. We still expect India’s Reserve Bank to hike policy rates by year end and see more upside for Mumbai stocks and for the rupee.

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