India, May 1 -- As the drums of war in West Asia have grown louder, oil prices have gone from $65 to over $100. And right on cue, the familiar chorus is returning: The Reserve Bank of India (RBI) must tighten monetary policy.

It is the wrong instinct.

India is about to repeat a policy error it has made too often by fighting supply-side inflation with demand-side weapons. The result is predictable: growth takes a massive hit as the blunt tool of raising interest rates must be stuck deep contain inflation.

According to the latest Household Consumption Expenditure Survey and RBI credit data, the share of the Indian consumption basket that is genuinely sensitive to interest rates is remarkably small. Housing and vehicle purchase together a...