Highlights of Annual Policy Statement for the Year 2009-10 (21st APRIL 2009)
The Reserve Bank of India (RBI) has cut the repo and reverse repo rate by 25 basis points each.
The repo rate has been cut to 4.75% from the existing 5% while the reverse repo has been cut to 3.25% from the existing 3.5%.
The bank regulator decided to leave the cash reserve ratio (CRR) unchanged.
The central bank slashed the GDP growth estimate for 2008-09, which ended on March 31, to 6.5 to 6.7%, and forecast growth of around 6% for 2009-10.
In FY09, the regulator projected credit growth at 20% while deposit growth is projected at 18%.
The special refinance facility for scheduled commercial banks (excluding RRBs) up to 1% of each bank’s NDTL as on Oct 24, 2008, has also been extended to March 31, 2010.
In FY10, inflation to be contained in the range of 4.0-4.5% with around 3.0% being the medium-term objective.
Money supply (M3) growth for 2009-10 is placed at 17.0%.
To launch exchange traded rate futures contract soon.
Extends special 14-day repo facility to banks till March 2010.
To conduct special 14-day term repo weekly basis.
To use a mix of monetary and debt management tools to manage large government borrowing in 2009-10.
The stance of monetary policy in 2009-10 will broadly be as follows:
Ensure a policy regime that will enable credit expansion at viable rates while preserving credit quality so as to support the return of the economy to a high growth path.
Continuously monitor the global and domestic conditions and respond swiftly and effectively through policy adjustments as warranted so as to minimize the impact of adverse developments and reinforce the impact of positive developments.
Maintain a monetary and interest rate regime supportive of price stability and financial stability taking into account the emerging lessons of the global financial crisis.