In India, Inflation Is a Rutted Road

Truck driver Sujan Singh should be delivering cars to Mumbai from Maruti Suzuki India’s plant near New Delhi. Instead, he’s sitting at a cafe alongside one of India’s busiest highways. “I’ll start again in the evening and travel through the night, as you face huge congestion during the daytime,” he says, enjoying the warmth of a burning pile of trash. “Most of the highways are just single lanes, and the roads are so uneven and bad that it causes accidents.”

India needs to upgrade its 4.2 million kilometers (2.6 million miles) of roads, close the gap between the power its utilities sell and what its manufacturers need, and ease congestion at ports. Its failure to do so is hobbling the central bank’s efforts to beat inflation. Even after the bank raised interest rates by a record 375 basis points in 1½ years, wholesale prices have risen more than 9 percent on an annual basis for 12 straight months. Although food prices have dropped some, the bank says supply bottlenecks that also push up costs must still be tackled.