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

At Khmer Rouge Court, Long-Awaited Verdict Approaches

First phase of trial, which is coming to an end, has focused on forced exodus of Phnom Penh in 1975 - and now many are hopeful justice will be served More

Video When Fighting Eases, Gazans Line Up at Bakeries

When there is a lull in the conflict, residents who have been hunkered down in their apartments rush out to stock up on food and other necessities More

Video Information War Rages Alongside Real One in Ukraine

Downing of Malaysian airliner, allegations of cross-border shelling move information war in war-torn country to a new level 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.
Information War Rages Alongside Real One in Ukrainei
X
Al Pessin
July 31, 2014 8:13 PM
The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video Information War Rages Alongside Real One in Ukraine

The downing of the Malaysian airliner two weeks ago, and allegations that Russians are shelling Ukrainian troops across the border, have moved the information war swirling around the Ukrainian conflict to a new level. VOA's Al Pessin reports from Kyiv.
Video

Video When Fighting Eases, Gazans Line Up at Bakeries

When there is a lull in the conflict in Gaza, residents who have been hunkered down in their apartments rush out to stock up on food and other necessities. Probably the most important destination is the local bakery. VOA’s Scott Bobb reports from Gaza City.
Video

Video US-Funded Program Offers Honduran Children Alternative to Illegal Immigration

President Obama and Central American leaders recently agreed to come up with a plan to address poverty and crime in the region that is fueling the surge of young migrants trying to illegally enter the United States. VOA’s Brian Padden looks at one such program in Honduras - funded in part by the United States - which gives street kids not only food and safety but a chance for a better life without, crossing the border.
Video

Video 'Fab Lab' Igniting Revolution in Kenya

The University of Nairobi’s Science and Technology Park is banking on 3-D prototyping to spark a manufacturing revolution in the country. Lenny Ruvaga has more for from Nairobi's so-called “FabLab” for VOA.
Video

Video Gazans in Shelled School Sought Shelter

Israel's air and ground assault against Hamas-led fighters in Gaza has forced many Palestinians to flee their homes, seeking safety. But safe places are hard to find, as VOA’s Scott Bobb reports from Jabaliya.
Video

Video Rapid Spread of Ebola in West Africa Prompts Global Alert

Across West Africa, health officials are struggling to keep up with what the World Health Organization describes as the worst ebola outbreak on record. The virus has killed hundreds of people this year. U.S. President Barack Obama and other world leaders are watching the developments closely as they weigh what actions, if any, are needed to help contain the disease.
Video

Video Michelle Obama: Young Africans Need to Embrace Women's Rights

U.S. first lady Michelle Obama urged some of Africa's best and brightest to advocate for women's rights in their home countries. As VOA's Pam Dockins explains, Obama spoke to some 500 participants of the Young African Leaders Initiative, a six-week U.S.-based training and development program.
Video

Video Immigrant Influx on Texas Border Heats Up Political Debate

Immigrants from Central America continue to cross the U.S.-Mexico border in south Texas, seeking asylum in the United States, as officials grapple with ways to deal with the problem and provide shelter for thousands of minors among the illegal border crossers. As VOA's Greg Flakus reports from Houston, the issue is complicated by internal U.S. politics and U.S. relations with the troubled nations that immigrants are fleeing.
Video

Video Study: Latino Students Most Segregated in California

Even though legal school segregation ended in the United States 60 years ago, one study finds segregation still occurs in the U.S. based on income and race. The University of California Los Angeles Civil Rights Project finds that students in California are more segregated by race than ever before, especially Latinos. Elizabeth Lee reports for VOA from Los Angeles.

AppleAndroid