Policy 2003-04: Highlights
29 April 2003
highlights of the Monetary Policy 2003-04 announced today:
- Gross domestic
growth (GDP) growth in 2003-04, assuming satisfactory
spatial distribution of monsoon, projected at about
6.0 per cent.
- Bank Rate reduced
by 0.25 percentage points.
- Cash reserve
ration (CRR) reduced by 0.25 percentage points.
situation on an average basis remained low except in
the fourth quarter during 2002-03 despite drought. Inflation
is expected to be in the range of 5.0 to 5.5 per cent
- Lower increase
in reserve money despite sharp increase in the Reserve
Bank of India's (RBI) foreign currency assets.
- Money Supply
(M3) remained within projected trajectory during 2002-03
and projected at 14.0 per cent for 2003-04.
- Sustained increase
in credit flow during 2002-03; non-food credit to increase
by 15.5 to 16.0 per cent during 2003-04.
- Sharp reduction
in interest rates of banks and in government and corporate
- Government borrowing
programme completed at lower interest cost with longer
maturity. Interest rates on corporate paper are at an
- Reserves build-up
at a low-effective cost without adding to external debt.
- Low interest
rates and strong forex position prompts prepayment of
- RBI to provide
adequate liquidity to meet credit growth and support
- Preference for
a soft and flexible interest rate environment to continue.
- Export credit
refinance facility to continue.
- Interest rate
on backstop facility reduced.
system to determine the prime lending rate (PLR) of
- Uniformity in
maturity structure of repatriable foreign currency as
well as rupee non-resident Indian (NRI) deposits.
investments liberalised and flexibility allowed to overseas
investors for flow of foreign direct investment (FDI).
- Further measure
to improve credit delivery mechanism to priority sector.
- Changes in prudential
measures for UCBs in line with JPC recommendations.