HIGHLIGHTS OF MID-TERM REVIEW OF RBI ANNUAL POLICY:08-09

[Sukumar.N]

MONETARY MEASURES
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* No change in banks' SLR norms.
* Repo, reverse repo, CRR, Bank Rate kept unchanged.
* Have option to conduct longer term repo, reverse repo.
* Third quarter review of monetary policy Jan 27.
* FY09 GDP target cut to 7.5-8.0% vs 8.0% earlier.
* FY09 inflation target unchanged at 7% by end-Mar.
* M3, credit, deposit growth target FY09 kept unchanged.

GDP GROWTH
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* Underlying India economic cycle turning in tune with global
economies.
* Maintaining financial stability policy priority.
* FY09 GDP target cut to 7.5-8.0% vs 8.0% earlier.
* End March inflation target maintained at 7.0%.
* Solution to global crisis is "beyond rule book".
* Need unconventional, unorthodox policy actions.
* Need close coordination in govt, regulatory agencies.
* Global financial situation remains uncertain, unsettled.
* "India cannot be immune" to global crisis.
* Global, existing domestic pressure challenge to policy.
* Have been proactive, taken steps to ease pressures.
* Confident of minimising global crisis impact on economy.
* India econ fundamentals strong, financial system healthy.
* Outlook on GDP uncertain on recent global developments.
* Downside risks to econ up on global developments.
* Adverse impact via trade, financial channels "have amplified".
* Export competitiveness to erode if global recession deep.
* Global recession may also restrict external finance.
* Need to bring inflation down to be conducive for growth.

N.Sukumar
Research Anayst