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Key points made by RBI governor in monetary policy review

business Updated: Jan 27, 2009 12:53 IST
Key points made by RBI governor in monetary policy review

Following are some key points made by Reserve Bank of India (RBI) Governor D Subbarao in his quarterly monetary policy review before the chief executives of commercial banks in Mumbai on Tuesday:

* This quarterly review is set in the context of a deteriorating global economic outlook and heightened uncertainty about the global financial sector.

* The initial hope that the crisis could be contained in the financial sector has been belied.

* There is now distinct evidence of further slowdown as a consequence of the global downturn.

* The knock-on effects of the global financial crisis, economic slowdown, and falling commodity prices are affecting the Indian economy in several ways.

* As an integral part of a globalising world, India cannot be expected to remain immune to a global crisis of this nature and magnitude.

* In responding to the crisis, India has to share the uncertainty on the way forward just like the rest of the world.

* To arrest the moderation in economic growth, it is critical that banks expand the flow of credit to productive sectors of the economy, and do so at viable rates.

* The actions of the Reserve Bank since mid-September 2008 have resulted in augmentation of actual or potential liquidity of over Rs.388,000 crore (Rs.3,880 billion).

* The response to the Reserve Bank's policy actions over the last several months is still unfolding.

* The projection of overall real gross domestic product growth for 2008-09 is revised downwards to 7 percent with a downward bias.

* Keeping in view the global trend in commodity prices and the domestic demand-supply balance, wholesale price inflation is now projected to decelerate to below 3 percent by end-March 2009.