Curbs on crop prices boost odds of India rate cut

New Delhi

THE door to another interest-rate cut in India has cracked open an inch after Prime Minister Narendra Modi's government limited gains in guaranteed prices for rice to levels not seen since 2006 and kept a lid on lentil costs. That will please central bank governor Raghuram Rajan, who this month stressed the "strong correlation" between Asia's second-fastest inflation and guaranteed agricultural purchase prices.

"The RBI had been quite explicit this is what they were looking for," said Surjit Singh Bhalla, a former World Bank economist and chairman of Oxus Research and Investments in New Delhi, referring to the Reserve Bank of India. "They had put the ball in the government's court - now the ball has come back into the RBI's court."