India central bank sees signs of recovery in Asia's third-largest economy

Industries Associated Press

India's central bank says it sees signs of recovery in Asia's third-largest economy even though the monsoon season, which is crucial for agriculture, had a weak start.

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The Reserve Bank of India on Tuesday left its key interest rate unchanged at 8 percent, maintaining a tough stance against stubbornly high inflation.

Gov. Raghuram Rajan said data on industrial growth and exports have been positive but a slow start to the monsoon that could drive up food costs. That would hurt the hundreds of millions of poor Indians who live on less than $2 per day.

Rajan has maintained a hard line against inflation despite pressure to cut interest rates to revive flagging growth. Wholesale inflation eased to 5.4 percent in June.