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Calibrated monetary policy essential to put economy on higher growth trajectory
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The Economic Survey 2008-09, presented by the Finance Minister Shri Pranab Mukherjee in Parliament today, lays focus on having a calibrated approach to using monetary policy measures for an early return to the high growth path. At the same time, efforts to build and preserve financial stability have to be high on the agenda.
The Survey says, the monetary policy in 2008-09 had to address the emerging economic situation, wherein the position in the second half of the year was substantially different from the first half. The policy had to contend with the spill-over effects of the global financial crisis, on the country’s growth path. The liquidity situation had improved significantly towards the end of 2008-09, in the wake of measures taken by the RBI.
Taking into account the need to respond to sluggish economic growth witnessed lately, the Survey says, growth in money supply (M3) for 2009-10 was envisaged at 17.0 per cent as an indicative projection. Consistent with this, the growth in aggregate deposits of scheduled commercial banks has been projected to grow at 18.0 per cent and non-food credit by 20.0 per cent.
The Survey says that the monetary policy stance for 2009-10 is aimed to ensure a policy regime that will enable credit expansion at viable rates while preserving credit quality so as to support the return of the economy of a high growth; to continuously monitory global and domestic conditions and respond swiftly and effectively through policy instruments so as to minimize the impact of the adverse developments and reinforce the effect of the positive developments; and maintain a monetary and interest rate regime supportive of price stability and financial stability.
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