RBI pares growth forecast further to 7%
Our Bureau Mumbai, Jan. 27 The Reserve Bank of India on Tuesday left its key rates unchanged in its third quarter review of monetary policy 2008-09. Even as it chose to keep the powder dry for future rate cuts, the central bank lowered the real GDP growth rate for 2008-09 to 7 per cent from 7.5-8.0 per cent projected earlier. While not ruling out occasional statistical episodes of negative inflation, the RBI has projected a sub-three per cent inflation level by end-March 2009 as against seven per cent projected earlier. Revising upwards, the projection for the aggregate deposit growth for 2008-09 to 19 per cent (17 per cent earlier) and non-food credit to 24 per cent (20 per cent), the RBI Governor, Dr Duvvuri Subbarao, emphasised that the policy easing done by the central bank in the last few months allows for considerable room for banks to respond (cut deposit and lending rates) more actively to the policy cues. Pointing out that the "context today is more testing", he said the downside risks to growth have amplified because of slowdown in industrial activity and weakening of external demand as reflected in the decline in exports. Services sector activities are likely to further decelerate in the second half of 2008-09. "Keeping in view the slowdown in industry and services and with the assumption of normal agricultural production, the projection of overall real GDP growth for 2008-09 is revised downwards to 7 per cent with downward bias," the Governor said. The global crisis will dent India's growth trajectory as investments and exports slow. "Clearly, there is a painful adjustment ahead of us. The year 2009-10 will be more challenging than 2008-09, he said. "As per current assessment, the inflation rate is expected to moderate further in the last quarter of 2008-09. Keeping in view the global trend in commodity prices and the domestic demand-supply balance, WPI inflation is now projected to decelerate to below 3 per cent by end-March 2009," the Governor said and added that the consumer price inflation is yet to moderate and the decline in inflation expectations has not been commensurate with the sharp fall in WPI inflation. "We will make credit more affordable to the common man. Asset quality is definitely a concern. Banks will have to take measures to protect asset quality.. Unless deposit rates don't come down, we can't cut PLR," said Mr. T.S. Narayanasami, Chairman, Indian Banks' Association and Chairman & Managing Director, Bank of India. http://www.thehindubusinessline.com/2009/01/28/stories/2009012851880100.htm ekamber --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
