India Likely Unable to Trim Budget Deficit

India is suffering from an inflation rate which will prevent it from cutting its budget deficit, according to Nomura Holdings.

India is currently suffering from an annual inflation rate over 9%. Though the Indian government has put in place targeted budget reductions, Nomura Holdings does not believe the Indian government will be able to meet these targets.

Nomura Holdings is projecting that the the Indian government will have to raise salaries and spend more on interest payments because of the inflation.

The cause of India's inflation may be related to the rising price of oil. At present, India imports nearly three-quarters of the oil it uses.

India is an interesting emerging market story because of the country's economy and population. The economy of India is the third largest in Asia and the country is the second most populated in the world, with 1.2 billion people.

Traders interested in India may wish to consider PowerShares India Portfolio (NYSE: PIN). PIN attempts to return a value in line with the general Indian economy.

If traders believe that inflation in India is a temporary problem, they may consider a play on the Indian currency the Rupee. WisdomTree Dreyfus Indian Rupee Fund (NYSE: ICN) tries to return a value corresponding the Indian currency.

India is certainly not the only country on Earth suffering from high inflation. How will it affect the country going forward?