CDAC Mumbai has developed a transliteration tool called Xlit, which transliterates [converts] betwen English and Indian Language[Hindi, marathi, tamil, kanada, etc.].
You can also use the same system for writng in Hindi in OpenOffice [A free OpenSource office suite:get it here: http://www.openoffice.org/ ], using an extension called XlitHindi. To download this please visit: http://extensions.services.openoffice.org/project/xlithindi .
Some screen shots of the extension:
Notice the 'XliHindi' Tool box, click it to enable the transliteration
Write sentence as "mumbai [HIT SAPCEBAR] bharat [HIT SAPCEBAR] ki [HIT SAPCEBAR] arthik [HIT SAPCEBAR] rajadhani[HIT SAPCEBAR]" and Right click to see better option:
After selecting the correct option in Hindi
click the 'XlitHindi' tool box to Disable the transliteration [You may also ON/OFF it for short periods using 'CTRL+T' key combination while writing].
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