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MONETARY POLICY 2011-12

 Repo rate hiked by 50 bps from 6.75% to 7.25%
 Reverse Repo rate hiked by 50 bps from 5.75% to 6.25% (dependent

 variable on the Repo rate – 100 bps below the Repo rate)
 CRR kept unchanged at 6%

 SLR kept unchanged at 24%
 GDP growth projection for FY 2011-12 placed at around 8% (in the range of 7.4% and 8.5%)

25%)  MP 2011-12.25%)  LAF corridor width set at 200 bps (with base at reverse repo – 6.docx .25% & ceiling at MSF – 8.CONT FY 2011-12 March end WPI inflation baseline projection placed at 6% with an upward bias  M3 growth projected at 16%. deposit growth at 17% and non-food credit growth at 19%  Bank rate kept unchanged at 6%.  MSF introduced at 1% above the Repo rate (8.

24% 6% . 7% Cash Reserve Ratio Unchanged Statutory Liquidity Unchanged Ratio Bank Rate Unchanged 6%.5% .5% 8%.FIRST QUARTERLY REVIEW Increase / (Decrease) since March 2010 At present Repo Rate Reverse Repo Rate .

KEY FEATURES  GDP growth projection for FY 2011-12 kept unchanged at around 8%  Inflation projection for March end FY 2011-12 revised upwards to 7% from 6% .

5% 6% 24% 6% Unchanged .SECOND QUARTERLY REVIEW Increase / (Decrease) At present Repo Rate Reverse Repo Rate Cash Reserve Ratio Statutory Liquidity Ratio Bank Rate .25% .5% 7. Unchanged Unchanged 8.25%.

6% (in line with our expectations)  Inflation forecast is kept at 7% by Mar-12 end.KEY FEATURES  RBI lowered the growth forecast for 2011-12 from 8% to 7.5% and 18% respectively  Depreciation of the rupee has emerged as another risk for inflation. .  Money supply and Credit growth maintained at 15.  Indian economy continued to face suppressed inflation as prices are administered in petroleum sector.

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Increase / (Decrease) At present Repo Rate Reverse Repo Rate Cash Reserve Ratio Statutory Liquidity Ratio Unchanged Unchanged 8.50% 7.00% .50% Unchanged Bank Rate Unchanged 6.50% 5.00% .50% 24.

9% from 7. mainly due to softening in food inflation (4.KEY FEATURES  The drop in November 2011 WPI inflation to 9.1%  The fiscal deficit at 74.11%.7%(expected in Q2)  Due to sharp moderation in industrial growth to -5.35% for the week ended December 3. 2011)  GDP growth rate has fallen to 6.6% in 2010-11 .4% of budgeted 2011-12 was significantly higher than 42.

INR 320 bn of primary liquidity will be injected into the banking system .  Projection of GDP growth for 2011-12 is revised downwards from 7.  In reducing the CRR.6% to 7%.40% p.9.a.25% .CONT FDs (Fixed Deposits) are offering interest in the range of 7.

INFLATION RATE 2011 .

5 18 7 15.5 18 .RBI projections in three reviews in 2011-12 Table 1: RBI Projections in Monetary Reviews (in %) May-11 Jul 11 Oct-11 Growth (2011-12) 8 8 7.6 Inflation (Mar-12) 6 M3 (Mar-12) Deposit (Mar-12) Credit (Mar-12) 16 17 19 7 15.

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