India8217;s high inflation will continue, warns ADB

India on Monday scrapped import duties on crude edible oils and banned exports of non-basmati rice amid a raft of measures to stem rising inflation, which hit a 14-month high in mid-March and has alarmed policymakers.

8220;In 2-3 weeks, you can see some impact of duty cuts on inflation,8221; Rao said, but added: 8220;In the next few months, the inflation pressures will persist.8221;

The measures would increase the local supplies, but it may require a higher subsidy to sell costly imported food items at government controlled prices, he said.

Earlier, an ADB report had forecast India8217;s inflation at 4.5 per cent in 2008/09 and then climb to 5 per cent in 2009/10. India8217;s wholesale price index rose 6.68 per cent in the 12 months to March 15 from 5.92 per cent in the previous week, as metals, food and fuel became costlier.

ADB said India8217;s economic growth could moderate to 8 per cent in the 2008/09 fiscal year and then rebound to 8.5 per cent in 2009/10.

The country8217;s statistics office estimate the economy to expand by 8.7 per cent in the year that ended on March 31, 2008.

Rao also said the bank had a blanket approval for raising 3 billion equivalent in rupee bonds and could start tapping the market this fiscal year.