<b>Credit Policy</b>: FY08 GDP growth projection 8.5%

The Reserve Bank of India (RBI) in its Annual Policy Statement for the Year FY08 says real GDP growth in 2007-08 may be placed at around 8.5% assuming no further escalation in international crude prices and barring domestic or external shocks.

The advance estimates of the Central Statistical Organisation (CSO) placed real GDP growth at 9.2% for FY07 over and above 9% in FY06.

"Among the cyclical factors, first, robust global GDP growth has been supportive of high growth in the country. Second, the persistence of high growth in bank credit and money supply, the pick-up in non-oil import growth and the widening of the trade deficit together indicate pressures on aggregate demand. Third, cyclical forces are also evident in the steady increase in prices of manufactures, resurgence of pricing power among corporates, indications of wage pressures in some sectors, strained capacity utilisation and elevated asset prices," the policy said.