The Reserve Bank of India (RBI) has scheduled its next mid-quarter review for March 15, 2012, a day before the presentation of the Budget. When it decided on the date, there was a general impression that the Budget would be announced by end-February, as usual, despite the elections to state Assemblies. Now the situation is different. RBI proposals will cover 45 days of which 30 will fall in the next financial year. While the prediction of the growth rate of GDP in 2012-13 may be in the realm of astrology, certainly the Budget forecasts for revenue, expenditure, fiscal deficit and borrowings will be among the benchmarks for the formulation of policy in relation to money supply, interest rate, open market operations and so on. In the interest of coordination between monetary and fiscal policies, it is desirable that the mid-quarter review is postponed by a week or so by which time the reaction of the markets and to the Budget would be known. It will also facilitate the formulation of the annual policy for 2012-13.
A Seshan Mumbai
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