Andy Mukherjee says a next RBI rate hike is very likely.
An article in the Business Standard "Smart Investor" supplement from yesterday, followed up by an edit today, mulls over similar themes.
One aspect that requires care in reasoning is the long lags between shocks to interest rates and their consequences for prices. Inflation may have a here-and-now urgency in the Indian political discourse. But rate hikes today will really help inflation closer to the next general elections :-)
Sometimes, there is a conflict between the needs of the domestic business cycle as opposed to the needs of the pegged exchange rate. Right now both are flashing positive, so there really isn't a conflict between the two. Even though RBI does not have monetary policy autonomy, what it does in order to hang on to a pegged exchange rate is roughly okay when compared with the needs of domestic inflation.