2. To put all the doubts to rest he states that RBI takes several indicators into consideration in it assessment of the economic situation - financial markets, industrial production, GDP growth, agricultural production, monsoon, bond markets. Hence, the RBI will not reverse its easy monetary policy just yet.
3. RBI on its part has done more than enough to infuse liquidity in the Indian economy and prop up growth and notable features worth mentioning are - slashing interest rates, reducing reserve ratios and buying back government bonds. It is likely that RBI may buy back government bonds to the tune of Rs 800 bn in 1HCY09.
4. One must appreciate this fatc that formulating monetary policy in India is more difficult than in other countries as one has to cater for the administered interest rates, capital account controls and a big fiscal deficit.
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