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click here for Credit Policies of 1999-2000, 2000-01, 2001-02, 2002-03, 2003-04, 2004-05, 2005-06
Macroeconomic and Monetary Developments First Quarter Review 2005-06
V. Financial Markets
Comfortable liquidity kept money market segments tethered to the reverse repo rate during the greater part of the quarter.
The foreign exchange market remained orderly and forward premia declined sharply in tandem with the movement of the rupee in the spot segment.
Yields in the Government securities market eased after April, 2005 with ebbing of inflationary pressures.
In the credit market, key interest rates edged up as commercial credit offtake was strong and broad-based.
The equity market staged a strong rally which pushed the BSE Sensex to new highs beyond the 7300 level in July 2005.
VI. The External Economy
In 2004-05, India's balance of payments recorded a modest current account deficit after a gap of three years. Buoyant merchandise exports and invisible earnings were outstripped by a massive expansion of imports, powered by soaring international crude prices as well as strong domestic demand.
Merchandise export growth at 19.5 per cent remained robust during April-June 2005.
Non-oil imports recorded a sharp increase of 40.2 per cent indicative of rising investment demand in the economy.
High and volatile international crude oil prices have translated into a large expansion in the POL import bill.
The trade deficit almost doubled from US $ 6.0 billion during April-June 2004 to US $ 11.5 billion during April-June 2005.
Foreign direct investment (FDI) flows picked up alongside various types of debt flows, while institutional portfolio flows significantly moderated in April-May 2005 as in other emerging markets.
Indias foreign exchange reserves at US $ 137.6 billion on July 15, 2005 were sufficient to finance 14 months of imports.
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Click Here For the First Quarterly Review of Annual Statement on Monetary Policy for the year 2005-06
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