In the mid-term, repo rate has been marginally raised but reverse repo rate, bank rate and Cash Reserve Ratio (CRR) have been kept unchanged. For basel II compliance time has been extended to March 31, 2009. RBI's accent is on financial inclusion and expansion of agricultural credit.

The exhibition of strong growth by the Indian economy signals heralding of a new era in the first decade of the new millennium itself. There have been sporadic activities in manufacturing as well as service sectors. As per the reports of Central Statistical Organization, (CSO) the Gross Domestic Product (GDP) has registered 8.9% growth in the first quarter of this financial year as compared with 8.5% of the corresponding period of last year. In spite of roller coaster volatility of the bourses the results season has sensed an altogether new north ward trend and BSE SENSEX has entered into "teens" after crossing the historic 13,000 mark. The recent easing in international crude oil prices falling below $60 per barrel, there is little indication that the prices will be stabilized at this level. There has been a tight supply-demand balance. Oil is the India's biggest import and contributes to the inflation at least in the past two years. The inflation which was below 5% mark for a long period has started hoodwinking by an upward trend with present level of 5.26%. Finance Minister has already reengineered his team of bureaucrats, most probably in the wake of Budget-2007 exercise.

The Reserve Bank of India (RBI), the central banking authority of our country is the regulator for the financial sector. The monetary policy affects the real sector through long and variable periods while the financial markets are also impacted through short-term implications. Keeping in view the changes in macro economic environment of the country, international environment and our exposure, price level and other key parameters, RBI announces its monetary and credit policy decisions. The Regulator announces biannual Monetary and Credit Policy twice in a year, in April and October. A slack season policy (April to September) is historically enunciated in the month of April, whereas a busy season credit policy (October to March) is announced in the month of October. The period of policy declaration was matching with the agricultural cycles in the country as agriculture was predominant in the past. With industrialization, reforms and liberalizations, the contribution by industry and service sector is soaring up as a result of which the share of agriculture is coming down and there has been perennial credit flow to industries on large scale.

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