1. RBI Annual Policy Statement FY – 2011 -- Puneet Piyush PGDM (Finance), LBSIM [email_address] +91 - 99539 76305

5. Few Important Updates Contd.. GDP Growth Target Forecast at 8% The RBI has placed its baseline estimate for real growth for the Indian economy for 2010-11 at 8% with an upside bias. The Annual Policy indicates that the RBI believes that the recovery in economic growth is consolidating and that growth is expected to accelerate from around 7.2-7.5% in 2009-10 to 8% in 2010-11, while becoming more broad-based. In particular, the growth rate forecast by the RBI assumes a normal south west monsoon in 2010, which remains a critical determinant of the domestic economic growth.

6. Few Important Updates Contd.. Baseline inflation forecast at 5.5% by March 2011 Against the backdrop of the reassuring prospects of Indian economic growth, the sharp rise in the wholesale price index (WPI) inflation since September 2009, exceeding the target of 8.5% for March 2010 set by the RBI, and the generalisation of persistently high food inflation into core inflation in recent months has emerged as the key concern. The RBI expects that a return of pricing power as well as the re-emergence of capacity constraints with a strengthening of demand in the near term would exert further pressure on inflation. Accordingly, the RBI has indicated its policy stance towards anchoring inflationary expectations, while “being prepared to respond appropriately, swiftly and effectively to further build-up of inflationary pressures”.