The annual credit and monetary
policy unveiled by the Governor,
RBI, on April 21, 2009, is a watershed policy not only containing
the impetus for economic growth but also embroidered with needed caution
to prevent any ill-effects sprouting from unforeseen happenings arising
locally or in other economies. The government addresses the problems concerning
inflation, unemployment, foreign trade and other socioeconomic
imbalances through a combination of fiscal measures and supply side management.
On the other hand, RBI, through its credit and monetary policies, controls
and maintains stability in price level, interest rates, liquidity in the system,
availability of credit, and not the least, the parity of Indian currency. Though
the customary annual policy is unveiled in April every year, RBI modifies
and course corrects it in each quarter, while reserving the right to intervene and
effect necessary changes even at any point of time during the year.
In the present Annual Policy, RBI Governor has dwelt upon six major
issues. One, the deteriorating economic conditions globally characterized by
the vicious cycle of high unemployment, falling income, lower
demand/consumption finally indexing to recession and
its direct and indirect impact coupled to our economy. Two, low interest rates
administered in advanced economies and the lurking dangers of pursuing
such policy in India particularly when CPI is yet to be tamed. Three, steep
depreciation of rupee against US dollar and depleting exchange reserves on the back
of widening current account deficit, dwindling net capital inflows and
adverse Balance of Payment position. Four, fiscal stimuli and massive public
spending planned by the government to spur economic growth and its appetite
for enlarged borrowing program with higher rate of fiscal deficit. Five,
banking failures in developed countries and the need to ensure better health to
Indian banking system. Six, active lending banks to support genuine credit
requirements of various sectors at reasonable cost. |
