In its latest policy measures to revamp the slowing economy, the Reserve Bank of India (RBI) has left all key rates unchanged including the repo, reverse repo and bank rate. In order to ensure liquidity in the financial system, RBI has left the Cash Reserve Ratio (CRR) at the current level.

 

However, the annual GDP growth target for the current financial year has been revised downward to 7% from 7.5% - 8% as predicted earlier. Inflation targets for this fiscal are scaled down to as low as 3%, versus an earlier target of below 7%.

 

RBI also expects further fall in Consumer Price Index (CPI) because of decline in input prices. Along with this it has also upped bank credit target to 24% from 20%. Money supply target has also been upped to 19% from 16.5-17%.

 

RBI has also extended refinance facility for commercial banks along with MFs, NBFCs HFCs to September 30, 2009. It also expects coming down of lending rates in the face of slowdown in deposit growth.

 

RBI expects fiscal deficit at 5.9% of GDP as against 2.5% as predicted earlier. RBI feels that revenue surplus of states may not materialize. It sees full effect of CRR cut felt in 4-6 months time.

 

The view of the RBI is that, global crisis will dent India's growth trajectory. Declining exports and industrial slowdown are the main factors for low growth in the economy, it said.