The Reserve Bank of India’s Governor announced the Mid-term Review of Annual Policy Statement for the year 2005-06 on October 25, 2005. The highlights are as follows:

• Based on current assessment of a pick-up in agricultural output and the momentum in other sectors, GDP growth projection for 2005-06 revised to 7.0-7.5% from the earlier projection of around 7.0%.
• Inflation in the range of 5.0-5.5% projected. Forward looking policy response is necessary to realise growth momentum and potential for higher growth without adding to inflation expectations.
• Exports in US dollar terms in the first half of 2005-06 increased by 20.5% compared with 30.8% in the corresponding period in the previous year. Imports rose by 33.1% as against an increase of 37.3% in the corresponding period last year. Hardening of international crude oil prices and import demand emanating from a pick-up in domestic industrial activity contributed to the import growth observed.
• Foreign exchange reserves stood at US$ 143.4 billion as on October 14, 2005, increasing from US$ 141.5 billion as at end-March 2005.
• On balance, macroeconomic and financial conditions have evolved as anticipated. Overall industrial growth has strengthened, monsoon fears have eased, non-food credit growth has been buoyant, the demand for government securities has been sustained and a pick-up in investment demand is evident.
• Some downward risks to the economic outlook have emerged in the recent months. Ensuring credit quality and increasing the pace of investment in infrastructure is important. Asset prices have registered a substantial increase. The overall positive sentiment, the business confidence of the private sector and the strength as well as resilience of the domestic economy would continue to determine capital flows.
• Bank Rate kept unchanged at 6.0%.
• Reverse Repo Rate increased by 25 basis points to 5.25%, effective October 26, 2005.
• The cash reserve ratio (CRR) kept unchanged at 5.0 per cent.