Annual Policy Statement for the Year 2006-07
by Dr. Y. Venugopal Reddy, Governor,
Reserve Bank of India
This Statement consists of two parts: Part I. Annual Statement on Monetary Policy for the Year 2006-07; and Part II. Annual Statement on Developmental and Regulatory Policies for the Year 2006-07. An analytical review of macroeconomic and monetary developments was issued a day in advance as a supplement to Part I of this Statement, providing the necessary information and technical analysis with the help of charts and tables.
2. The Annual Policy Statement for 2005-06 introduced a change in format of the presentation, separately focusing upon monetary policy and developmental and regulatory policies in Part I and Part II, respectively. This was intended to ensure clarity of roles and responsibilities within the Reserve Bank and to enable more transparency in policy communication. It has also enabled more frequent reviews of monetary policy at quarterly intervals. In recent years, financial stability has assumed priority in the conduct of monetary policy. The institutional environment has been changing rapidly including, in particular, the implementation of the Fiscal Responsibility and Budget Management Act and the increased financial integration taking place domestically and with global markets. In this context, it has become important to recognise and exploit the strong complementarity between macroeconomic and financial stability. Accordingly, while separate coverage of monetary and developmental and regulatory policies enhances clarity and transparency in communication, it is important to take a holistic approach.
3. The Annual Statement on Monetary Policy will be reviewed on a quarterly basis during 2006-07 as in the previous year, whereas the Annual Statement on Developmental and Regulatory Policies will be reviewed along with the Mid-term Review of monetary policy. Accordingly, the tentative dates for the First Quarter Review, the Mid-term Review and the Third Quarter Review are July 25, 2006, October 17, 2006 and January 23, 2007, respectively.