Next year to be more challenging - RBI

By Anurag Joshi

MUMBAI (Reuters) - Next year will be a more challenging year than this has been but the Reserve Bank of India (RBI) will continue to do everything possible to lessen the domestic effects of the global financial crisis, its chief said.

In speech released on Thursday but given on Dec. 10, RBI Governor Duvvuri Subbarao said the outlook for India and the world remained uncertain and the path of the global crisis and its resolution remained unclear.

While the central bank had a roadmap, it was not possible to deploy it all in one go.

"It would be our endeavour to adapt this roadmap to the evolving global developments and implement it flexibly and pragmatically," he said.

"Our approach, as indeed of every prudent central banker around the world, has been to 'cross the river by feeling the stones'."

Subbarao said India's economic fundamentals remained strong, but developments in the real economy, financial markets and global commodity prices pointed to a period of moderating growth and declining inflation.

"The year 2009-10 will be more challenging than the current one," he said.

"The RBI will continue to be on vigil and do everything possible within its mandate to mitigate the impact of the crisis on the Indian economy."