Do More With Reuters
Partner Services

RBI says economy susceptible to global risks

Thu Oct 18, 2007 12:13pm IST
 
Email | Print | | Single Page
[-] Text [+]

MUMBAI (Reuters) - India's economy is still susceptible to risks from global developments in the form of inflationary pressures and repricing of risk by financial markets, the Reserve Bank of India (RBI) governor Yaga Venugopal Reddy said.

Reddy said excessive leveraging has enhanced the vulnerability of the global financial system and large changes in liquidity conditions were obscuring the assessment of risks.

"Given the flux associated with both the financial markets and the monetary policy settings globally, India cannot be immune to these developments," he said, in a speech delivered on Wednesday in Washington.

The speech was made available on the RBI's Web site on Thursday.

"Contextually, we in the Reserve Bank are, therefore, maintaining enhanced vigilance to be able to respond appropriately to the prevailing heightened uncertainties in global financial as well as monetary conditions," he said.

Reddy said there were many challenges facing the economy in the medium term, which include improving farm productivity, augmenting infrastructure and a shortage of skilled manpower.

"The recent upwards trends in global prices of major food items have significant implications for the domestic agricultural sector and overall macroeconomic and financial stability," he said.

But short-term prospects were by and large benign despite global uncertainties, he said.

The RBI expects the economy to grow by 8.5 percent in the current fiscal year ending in March, lower than growth of 9.4 percent in 2006/07.

Russian Finance Minister Alexey Kudrin poses with his G20 colleagues and central bank leaders during the family photo at the G20 Finance Ministers meeting at a hotel in St. Andrews, Scotland. REUTERS/POOL New
Pledge to support economies

G20 financial leaders pledged to prepare strategies to end emergency support for their economies, but to keep the aid flowing until recovery was assured.  Full Article | Related Story 

Photo

special coverage

Photo
Central Banks Cautious

Reuters tracks the policies of the world's top central banks as the debate over global economic recovery rages on.  Full Coverage 

Market Update

  • IndiaIndia
  • USUS
  • UKUK
  • Asia
  • Most Actives

SHOWCASE

Sanjay Sinha
Balancing Act

In India, it is a tough choice between growth, managing inflation and financial stability.  Full Article 

 
Nipun Mehta
Road to Recovery

There needs to be an acceptable balance created between education and healthcare and infrastructure spend, says Nipun Mehta of SG Private Banking.   Full Article 

 
Robot Asimo

Snapshots of Honda Motor's humanoid robot Asimo  Slideshow 

 
Marketing Strategy
Marketing Strategy

Companies are now using direct marketing methods to sell their products.  Full Article 

 
Exit Plans
Exit Plans

Factbox - Stimulus exit plans for Asia-Pacific's big 5 economies  Full Article