* Inflation fight means growth to miss target
* Can't tell now if more tightening needed
(Adds details, context)
By John Ruwitch
HANOI, May 4 India's fight against inflation
could knock about half a percentage point off economic growth in
Asia's third-largest economy this fiscal year, Finance Minister
Pranab Mukherjee said on Wednesday, a day after the central bank
"It may be around... 8.5 percent. So, it will be about half
a percent," he told Reuters when asked about the impact of
stubbornly high inflation on gross domestic product growth.
The Reserve Bank of India stepped up its fight against
rising prices on Tuesday, raising interest rates by a
bigger-than-expected 50 basis points and vowing to battle price
pressures even at the cost of some economic
The Indian government had been expecting economic growth
this year of 8.75 percent to 9.25 percent, Mukherjee said.
India is not alone in facing up to the reality that GDP
growth is likely to be dented in the battle against inflationary
pressures that have been building in Asia as the region leads
the global recovery.
Vietnam, which has the highest inflation among the main
Asian economies, signalled on Tuesday that the government had
lowered its expectations for economic growth because it was
focusing on reining in prices.[ID:nL3E7G30BF]
Mukherjee, in Hanoi for the Asian Development Bank's annual
meeting, said it was too early to tell if further measures would
be needed to check inflation.
"We have already taken steps. I do hope it will have its
impact," he said. More tightening may be taken "if it is
needed", he said, adding "I can't predict right now."
The Reserve Bank of India has been among the most aggressive
central banks anywhere with nine rate rises since March 2010,
but its gradual policy tightening has failed to cool inflation
initially driven by high food and fuel prices, and more recently
by demand pressures.
Slower economic growth would be another political headache
for Prime Minister Manmohan Singh. His government is counting on
growth of 9 percent to help fund increased social spending and
keep the fiscal deficit in check.
The target is in excess of most private forecasts and the
central bank's expectation for growth of about 8 percent, which
assumes a normal summer monsoon and global crude oil prices of
$110 a barrel.
The economy grew by an estimated 8.6 percent in the fiscal
year that ended in March 2011.
Much of India's stubbornly high inflation is blamed on
supply bottlenecks, including in food output, which are beyond
the scope of monetary policy.
(Editing by John Mair)