ANALYSIS-India looks to rains, not just rates, to cool hot inflation

India's monsoon is crucial for its farm output and economic growth, with just over half of arable land fed by rain. If this year's monsoon disappoints, analysts believe the government will have limited fiscal space to arrest prices. (File pic show heavy rain in Mmbai.)

MUMBAI: As India faces a crippling surge in food and fuel prices, its policymakers will be counting mostly on this year's monsoon rains, not just interest rate hikes, to take inflationary pressure off the country's households and businesses.

Like its international peers, the Reserve Bank of India is expected raise rates aggressively over the next year to take some of the heat out of prices, but the global drivers of the country's inflation mean there are limits to what domestic monetary policy can achieve, analysts say.