News / Asia

India Hikes Interest Rates to Control Rising Prices

India's opposition Bharatiya Janata Party (BJP) senior leader L.K. Advani, center, with party supporters march towards Indian parliament to protest against the price rise in New Delhi, India (File Photo)
India's opposition Bharatiya Janata Party (BJP) senior leader L.K. Advani, center, with party supporters march towards Indian parliament to protest against the price rise in New Delhi, India (File Photo)

India has hiked interest rates for the sixth time this year, in a bid to tackle high inflation. One of the government's most challenging problem is to curb rising food prices.      

Just days ahead of India's main festival, Diwali, shoppers crowd a popular market in New Delhi.  They have come to buy traditional Indian sweets, nuts and other gifts which are customarily exchanged with friends and family.

But rising costs of these items have cast a dampener on the Hindu festival of lights. Shubha Gupta says prices are up substantially, compared to last year.

"Giving gifts is a problem.  I mean we have to make compromises," said Gupta.  "We are not going in for sweets and all, but we will go in for other things."

A huge hike in food prices has emerged as the toughest problem for the government to tackle, as India copes with persistently high inflation.  Although overall inflation is down to about eight and a half percent, food inflation is hovering around 15 percent.

Citing inflation as an overriding concern, the Central Bank Tuesday raised interest rates by a quarter percentage point.  It is the sixth time this year interest rates have been hiked in a bid to tame inflation.

The deputy secretary of the Planning Commission, Montek Singh Ahluwalia, says inflation continues to be an issue.   
"It is true that inflation is still at a range which is not comfortable, although, as we have been saying, it is going down," said Ahluwalia.

Policy makers say the rising interest rates will not disrupt the momentum of growth in the economy, which has recovered from the global financial crisis.

The return to growth of around eight and a half percent is providing some compensation for the middle classes.

Among them is Varsha Jain.  As she goes around the market, she admits that her budget is under strain.

But she says salaries have been increasing and, therefore, it is not surprising that shopkeepers have also raised food prices.

However, millions of poor people in the country, who are marginalized by the growing economy, are finding it particularly hard to cope with the higher food prices.

Tulsi Ram, who is selling flowers on a pavement outside a confectionery shop, says the rising prices have no impact to those who are earning well, but he will have to cut down his purchases for the festival. 

The government was hoping that good monsoon rains and an ample harvest would tame food prices.  But that has not happened.

Finance Minister Pranab Mukherjee said on Monday that the continued rise in the cost of living is a matter of concern. The government is hoping that the steps taken to control prices, such as raising interest rates, will bring down inflation to about six to seven percent, by March.

You May Like

Turkey: No Ransom Paid for Release of Hostages Held by IS Militants

President Erdogan hails release of hostages as diplomatic success but declines to be drawn on whether their release freed Ankara's hand to take more active stance against insurgents More

Audio Sierra Leone Ends Ebola Lockdown

Health ministry says it has reached 75 percent of its target of visiting 1.5 million homes to locate infected, educate population about virus More

US Pivot to Asia Demands Delicate Balancing Act

As tumult in Middle East distracts Obama administration, efforts to shift American focus eastward appear threatened More

This forum has been closed.
Comments
     
There are no comments in this forum. Be first and add one

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Natural Gas Export Plan Divides Maryland Towni
X
Deborah Block
September 21, 2014 2:12 PM
A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Alibaba Shares Soar in First Day of Trading

China's biggest online retailer hit the market Friday -- with its share price soaring on the New York Stock Exchange. The shares were priced at $68, but trading stalled at the opening, as sellers held onto their shares, waiting for buyers to bid up the price. More on the world's biggest initial public offering from VOA’s Bernard Shusman in New York.
Video

Video Obama Goes to UN With Islamic State, Ebola on Agenda

President Obama goes to the United Nations General Assembly to rally nations to support a coalition against Islamic State militants in Iraq and Syria. He also will look for nations to back his plan to fight the Ebola virus in West Africa. As VOA White House correspondent Luis Ramirez reports, Obama’s efforts reflect new moves by the U.S. administration to take a leading role in addressing world crises.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Militant Assault in Syria Displaces Thousands of Kurds

A major assault by Islamic State militants on Kurds in Syria has sent a wave of new refugees to the Turkish border, where they were stopped by Turkish border security. Turkey is already hosting about 700,000 Syrian refugees who fled the civil war between the government and the opposition. But the government in Ankara has a history of strained relations with Turkey's Kurdish minority. Zlatica Hoke reports Turkey is asking for international help.
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid