In the so-called "two-speed" economic recovery currently underway in the world economy, India without question belongs to the faster category. With GDP expanding at an annual rate of 8.6% in the 2010/11 fiscal year (April-March), policymakers' overriding concern is keepng inflation under control at the same time as maintaining the rapid pace of expansion. To this end, India's interest rate has been raised seven times since March of last year. The Mumbia-based stock exchange Sensex has declined 14% since the turn of the year, although, as the chart below shows, this still leaves the index comfortably above 1hO9 levels. Investor sentiment was not helped by news that industrial production in November showed a relatively minor increase of 2.7% from a year earlier. Moreover, as mentioned in previous editions of the MSR, food price inflation has been surging. At the end of January the country's food price index was running at 13%.
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