India has lowered taxes on petroleum products to protect its economy from rising crude oil prices.

As global oil prices climbed past $45 a barrel, the Indian government cut a range of duties on gasoline, kerosene and cooking gas. The measure is expected to curb inflation, which has climbed to seven and a half percent, the highest in three and a half years.

The high inflation is being blamed on steadily rising oil prices in recent months, and deficient rains in parts of the country.

India imports about three-quarters of its crude oil, and the country's oil bill accounts for a third of the total value of all imports.

Mahesh Vyas at the independent Center for Monitoring of Indian Economy says surging oil prices will hurt industry and consumers.

"I see a substantial increase in the cost of production of manufacturing companies," he said. "It also impacts with a little delay the cost of living index, and I see a small increase in consumer prices as well because of this."

Nevertheless, high prices have not cut demand, and oil imports this year are expected to rise by 10 percent.

But investment firm J.M. Morgan Stanley warns that a $5 rise in crude oil prices in a year can shave growth by a quarter percent in India.

Many economists say the weather is as much a cause for concern as oil prices.

Heavy rains in eastern India have triggered floods, but the monsoons have arrived late in several key food-producing regions in the west and the north. That is expected to hurt rural incomes, and slow consumer demand.

Last year, ample monsoon rains gave the country a record farm output, and helped push economic growth to over eight percent, second only to China's.

India is expected to remain among the world's fastest growing economies this year, growing at between six to seven percent.