However, India concedes a new inflation orbit

With imported inflation running through the basic inputs for well over a year and price rise now taking place in Consumer Staples, RBI raised its inflation target to 7% and in fact market commentary s likely to concede it to a consensus of 8% in the next 5-6 weeks. The current rates of 9% never expected to abae steeply will thus be the immediate reason for the rate hikes but soon even that will be left out of the mechanics as this imported inflation component is persisent oand out of control thru monetary or fiscal policy. However, RBI has committed in seriousness to controlling the same as far as possiblem setting a new orbit for India's interest rates as well.

Thus, India has a new Interest rate regime, akin to the nineties

A lot of us as commentators or Fixed Income practitioners have been observing that we are not at all comfortable as a nation with the temporary low interest rate regime in our banking transactions and more. What will happen with this 50 bps hike in Repo and REverse Repo rates is that India will climb into its more comfortable high interest rate regime, and thus credit growth projections are also down to 18%. Of course, one cannot say this with certainty even now with the MSF at 9% and yields on Treasuries thus immediately moving up from 8.29% to above 8.5% but it is unlikely that with such stronger steps one can call it quits to the spiral of rate hikes we have unleashed/. Our secular growth thus will survive despite the monetary dissincentive and not grow by monetary incentives. However, India now has to be clear and careful on the fiscal front as any overages on Fiscal policy will be the only thing detrimental as we move along the same policy path we set for ourselves in December with inflation coming down bu tmay be not continue a downward trend as subsidies are excessed out of the government system by cash or by  market pricing. And that is the tightrope we must walk

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