India hikes rates for fourth time this year

MUMBAI, July 27, 2010 (AFP) – India’s central bank is expected to raise interest rates on Tuesday for the fourth time this year in an attempt to tame the highest inflation among the Group of 20 economic powers. The Congress-led government has been under constant attack from opposition parties for its inability to protect the poorest from surging food prices.

Over the last seven months, annual food inflation has swung between 13 and 20 percent, causing huge hardship, especially among the 450 million people who struggle below the poverty line.

“India is battling inflation at a time when most of the developed economies are trying hard to ward off deflation. There’s no common rule that fits all countries,” noted former central bank governor Y.V. Reddy before the decision.

Inflation is expected to remain problematic for the next few months but should moderate by the end of 2010.

The RBI said in its first-quarter 2010-11 report on macroeconomic and monetary developments on Monday that anti-inflationary monetary policy actions were a necessity to contain inflation and inflation expectations.

The opposition Hindu nationalist Bharatiya Janata Party (BJP) organised a national general strike earli