Slowing inflation rains on India's parade of strong growth

Mumbai

INDIA'S economy is struggling to recover its strong growth record, beset by record low inflation, a widening output gap, and short-term uncertainty from the introduction of a uniform sales tax.

That will build pressure on the Reserve Bank of India to jettison its neutral monetary policy bias adopted just five months ago, setting the scene for lowering interest rates perhaps as early as next month, besides reminding yield-chasing investors that putting money in India is not without risks.

Any reduction in interest rates will be in contrast to what major central banks are trying to signal - a rise in borrowing costs - and could …