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The first Quarter Review of the Annual Monetary Policy Statement for 2008-09 was undertaken by the Reserve Bank of India (RBI) amidst moderate growth in GDP and industrial output, higher crude oil prices resulting in widening trade deficit and huge fiscal deficits (via higher subsidy bill) and 13-year high WPI inflation.

These looming concerns triggered expectations of pause in tightening monetary policy by RBI on July 29; however, the Central Bank emphasized on bringing down the inflation while reviewing its policy. Coupled with supply constraints, aggregate demand pressure is also very much evident from double-digit inflation, growing merchandise imports, and upsurge in fiscal deficits along with strong investment demand. Moreover, key monetary and banking aggregates such as money supply, bank credit and aggregate deposits posted growth, well above their respective targeted growth rates. Thus, moderation in the monetary expansion in consonance with the outlook on growth and......

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Approximate Word Count: 2055
Approximate Pages: 9 (250 words per double-spaced page)

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