>INDIA SUMMIT 2010: Growth to stay strong but be alert to inflation and trade deficit risks

■ Faster than expected recovery in growth: Various economic indicators have surprised on the upside, confirming that the pace of the recovery is stronger than we expected. Industrial production accelerated to 15.1% YoY during the three months ended March 2010 compared with a trough of 0.3% YoY for the three months ended February 2009.

■ Shift in growth driver from government policies to private sector autonomous demand in 2010: We estimate GDP growth will strengthen to 8.5% in 2010 from 6.4% in 2009. We expect the recovery trend to be sustained even as policy makers gradually withdraw monetary and fiscal policy support.

■ Risks of a pickup in inflation pressures and a wider trade deficit: Non-food inflation shot up to 8.1% YoY in April 2010 from 2.6% in December 2009. Similarly, the three-month trailing trade deficit jumped to 8.2% of GDP annualized in March 2010 from the trough of 4% in March 2009.

To read the full report: INDIA SUMMIT