The Reserve Bank of India has adopted a soft monetary policy, issuing banking sector funds to aid the economy.

SBI Chairman O P Bhatt expects a 7% expansion in fiscal 2010, while RBI Professional forecasters revised their forecast downward to 6%, according to Outlook India. (Why India is moving up).

On the upside:

  • Companies will likely ask banks for working capital loans as the IPO market picks up, which would help revive the economy
  • The auto and infrastructure industries are seeing more demand
  • Industrial production is up
  • Business confidence is on the optimistic side
  • Stock markets are strong

On the downside:

  • Private consumption demand is slowing
  • The first quarter showed a decline in corporate sales
  • A weak monsoon season has hurt agricultural output
  • Credit growth is low
  • Exports have dipped
  • PowerShares India (NYSEArca: PIN): up 64.2% year-to-date

  • WisdomTree India Earnings (NYSEArca: EPI): up 78.7% year-to-date

Max Chen contributed to this article.