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April 27, 2000
CREDIT POLICY 2000
RBI puts 2000-2001 GDP growth at about 7%, ready for drought-relief work
Assuming the rate of inflation to be around 4.5 per cent and projected expansion of money supply (M3) at about 15 per cent, the Reserve Bank of India or RBI has estimated that the growth in real gross domestic products or GDP would be around 6.5 to 7 per cent for the year 2000-2001.
(M1: A measure of money supply that includes all coins and notes in circulation, and personal current accounts. M3: A measure of money supply, including those covered by M2 -- a measure of money, supply, including M1, plus personal deposit accounts -- plus government deposits and deposits in currencies other than rupee.)
This order of growth is expected to be based on a normal agricultural crop and continued improvement in industrial performance. Non-food bank credit adjusted for investments in commercial paper, shares, debentures and bonds to public sector units and private corporate sector is projected to increase by around 16 per cent.
The RBI said that the impact on oil import bill due to increase in the prices of oil is estimated to be $ 12 billion during the year 1999-2000 and this increase in liabilities was absorbed without an undue pressure in the overall current account deficit.
The current account deficit is likely to be around 1 per cent of the GDP which is the same level as in the previous year. The relatively low level current account deficit was made possible by a turnaround in exports, lower growth in non-oil imports and continued buoyancy in invisible receipts, the RBI said.
In the last 16 months, crude oil prices increased by around 150 per cent from $ 10-11 per barrel. However, following the recent decision of OPEC to increase oil production, prices have declined to around $ 20 per barrel from the peak of $ 25 per barrel.
RBI gears up for drought relief work
The RBI has instructed its regional offices to remain in close contact with the state government authorities and local banks so that expeditious action is taken to provide relief to the drought-affected parts in the country.
The drought affected areas, including the Kutch and Saurashtra region in Gujarat, some regions in Rajasthan, Andhra Pradesh and Orissa are to be provided with maximum support as per the RBI guidelines, for conversion of short-term production loans into medium-term loans, rescheduling/postponement of existing term loan instalments, providing additional need-based crop loans. Working capital and consumption loans and relaxation in security and margin norms.
The RBI has also advised the convenor banks of state-level Bankers' Committee to convene the meeting of SLBC to take stock of the situation and initiate immediate steps for providing relief.
RBI Governor Bimal Jalan's policy statement
RBI's Credit and Monetary Policy 2000-2001
RBI's Credit and Monetary Policy 1999-2000
RBI's Credit and Monetary Policy 1998-1999
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