The mid-term review of the monetary and credit policy by the RBI considers the balance between growth and price stability in a difficult geopolitical environment. Inflation, higher non-food credit demand, and impact of globally rising interest rates and oil prices had to be factored in this policy. The policy tries to achieve a balance between price stability and maintaining the momentum of growth. This article talks about the different measures of RBI's mid-term monetary and credit policy.
The emphasis of the Reserve Bank of India's mid-term review of the monetary and credit policy was on the inflation rate in recent months and its possible adverse effect on the growth prospects of the economy. In the October 2003-04 policy, the GDP growth forecast was raised, the inflation projection pared, while interest rates and Cash Reserve Ratio (CRR) were left unchanged. The focus, then, was on adequate credit flow to small businesses and agriculture sectors at the right price. In this year's policy, the rates were not altered and the policy emphasized on continued provision of adequate liquidity to meet credit growth and support investment and export demand, while keeping a close watch on price movements. Further, interest rate policy was to support the growth momentum and price stability.
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