Growth in India still robust but worries about the negative impact from the Eurozone

In these worrying times for the Eurozone economy it might be encouraging to see that India's economy grew at an annual rate of 8.6% in the three months to March 2010. This economic strength was largely based on a buoyant manufacturing sector. This data will support a continued tightening in monetary policy with the Reserve Bank of India (RBI) likely to raise interest rates further in coming months. It has already moved interest rates higher in March and April in an attempt to curb high levels of price inflation. The worry for the Indian economy must be that it starts to suffer in the wake of the sovereign debt crisis hitting the European economy. If these governments continue to raise taxes and cut public spending this is likely to have a domino effect across the globe with trade levels suffering and consumer confidence hit badly.