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click here to return to main page of Mid-term Review of Annual Policy for the year 2004-05



Highlights of Mid-term Review of Annual Policy for the year 2004-05

Domestic Developments

GDP growth projection for 2004-05 placed in the range of 6.0-6.5 percent as against the earlier expectation of 6.5-7.0 per cent.

Annual inflation, as measured by point-to-point variations in the wholesale price index, rose from 4.6 per cent at end-March to 8.3 per cent in end-August but has since come down to 7.1 per cent by October 9, 2004.

The point-to-point inflation rate based on WPI for the year 2004-05 is projected at around 6.5 per cent for policy purposes as against of 5.0 per cent projected earlier.

Money supply (M3) growth in this fiscal year (up to October 1, 2004) lower at 5.4 per cent as compared with 7.8 per cent in the previous year.

Projected expansion of money supply (M3) for 2004-05 retained at 14.0 per cent.

A robust increase in non-food credit by 11.5 per cent in this fiscal year (up to October 1, 2004) as compared with an increase of 6.0 per cent in the previous year.

The Central Government has completed gross market borrowings of Rs.75,044 crore in the fiscal year (up to October 21, 2004), which is 49.8 per cent of the budgetary amount.

The Central Government has completed net market borrowings of 29.0 per cent of the budgeted amount up to October 21, 2004.

The market borrowing programme in the remaining part of the year needs to be calibrated carefully in view of strong credit demand.

Financial markets have remained generally stable though the government securities market tended to show some nervousness in recent months.

The market interest rates have displayed some upward movement, particularly at the longer end.

Banks advised to prepare themselves to implement the capital charge for market risk as envisaged under Basel II norms in a phased manner by end-March 2006.


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