RBI needs tougher anti-inflation brief

By Saikat Chatterjee

MUMBAI (Reuters) - Indian monetary policy is still loose despite a burst of interest rate increases and economists say the Reserve Bank of India (RBI) needs to train its sights on inflation alone rather than juggle growth, the currency and price stability.

Some doubt a formal inflation target will work in India, but they feel the RBI should have a stronger anti-inflation remit, since its parallel efforts to support economic growth and manage the currency undermine its role in holding down prices.

"Monetary policy is still too loose in India; they are playing catch-up with the curve," said Rajesh Chakrabarti, finance professor at the International School of Business in Hyderabad.

Annual inflation has nearly tripled since the start of the year to 11.6 percent, its highest in more than 13 years, and economists see it hitting 13-15 percent by the end of 2008.