Priority is rupee stability: RBI
A survey of professional forecasters by the Reserve Bank of India (RBI) expects recovery in growth from 5% in 2012-13 to 5.7% in 2013-14, and average wholesale inflation to moderate to 5.3%.
The Macroeconomic and Monetary Developments - First Quarter Review 2013-14 released by the central bank a day ahead of policy review meet says: "Macroeconomic conditions have distinctly weakened during Q1 of 2013-14. There is no evidence yet of recovery in growth even as headline inflation has moderated. Consumer price inflation, especially food inflation, remains high, although a good monsoon should help in this regard. Business confidence remains low, as is evident from recent expectations surveys. The external sector is under stress. While recent liquidity tightening measures instituted by the Reserve Bank to curb volatility in the exchange rate provide at best some breathing time, it is important to push through structural reforms necessary to inspire the trust and confidence of both domestic and foreign investors. The priority for monetary policy now is to restore stability in the currency market so that macro-financial conditions remain supportive of growth. This strategy will succeed only if reinforced by structural reforms to reduce the CAD and step up savings and investment." Read More