CONTENTS

Page No.
PART ONE : THE ECONOMY: REVIEW AND PROSPECTS
I. ASSESSMENT AND PROSPECTS ....................................................................................... 1
Assessment of 2008-09 .......................................................................................................... 5
Prospects for 2009-10 ............................................................................................................ 11
Policy Challenges ................................................................................................................... 27

II. ECONOMIC REVIEW

Macroeconomic Policy Environment ............................................................................ 30
Real Sector Policies ......................................................................................................... 31
Fiscal Policy ...................................................................................................................... 35
Monetary Policy Measures ............................................................................................... 44
Credit Delivery .................................................................................................................. 46
Financial Sector Policies .................................................................................................. 46

Real Economy ................................................................................................................. 50

Aggregate Supply ............................................................................................................. 51
Aggregate Demand .......................................................................................................... 76

Money, Credit and Prices ............................................................................................... 83

Reserve Money ................................................................................................................ 84
Monetary Survey .............................................................................................................. 87
Price Situation .................................................................................................................. 95

Government Finances .................................................................................................... 113

Central Government Finances ......................................................................................... 114
State Government Finances ............................................................................................ 121
Combined Government Budgetary Position of Centre and States .................................. 122
Fiscal Outlook ................................................................................................................... 124

Financial Markets ........................................................................................................... 135

International Financial Markets ........................................................................................ 136
Domestic Financial Markets ............................................................................................. 138
Money Market ................................................................................................................... 139
Foreign Exchange Market ................................................................................................ 144
Government Securities (Secondary) Market .................................................................... 146
Credit Market .................................................................................................................... 148
Equity and Debt Markets .................................................................................................. 149

External Sector ............................................................................................................... 157

International Developments .............................................................................................. 157
India’s Balance of Payments ............................................................................................ 162
External Debt .................................................................................................................... 182
Foreign Exchange Reserves ............................................................................................ 184
International Investment Position ..................................................................................... 186

i
 CONTENTS

Page No.

PART TWO: THE WORKING AND OPERATIONS OF THE RESERVE BANK OF INDIA
III. MONETARY POLICY OPERATIONS .................................................................................... 188
Monetary Policy Operations: 2008-09 .................................................................................... 189
Monetary Policy Operations: 2009-10 .................................................................................... 196
Liquidity Management ............................................................................................................ 201

IV. CREDIT DELIVERY ............................................................................................................... 210

Priority Sector Lending ........................................................................................................... 211
Micro Finance ......................................................................................................................... 221
Financial Inclusion .................................................................................................................. 222
Financial Literacy and Credit Counselling .............................................................................. 226
Export Credit ........................................................................................................................... 227
Extension of Collateral Facility – Savings Bonds ................................................................... 229
Non-banking Financial Companies ........................................................................................ 229
Scheduled Commercial Banks ............................................................................................... 230

V. DEVELOPMENT AND REGULATION OF FINANCIAL MARKETS ..................................... 231

Money Market ......................................................................................................................... 232
Government Securities Market ............................................................................................... 233
Foreign Exchange Market ...................................................................................................... 235

VI. FINANCIAL REGULATION AND SUPERVISION ................................................................. 241

Regulatory Framework for the Indian Financial System ........................................................ 243
Committee on Financial Sector Assessment ......................................................................... 245
Commercial Banks ................................................................................................................. 247
Urban Co-operative Banks ..................................................................................................... 257
Rural Co-operatives ................................................................................................................ 259
Regional Rural Banks ............................................................................................................. 260
All India Financial Institutions (AIFIs) ..................................................................................... 262
Non-Banking Financial Companies ........................................................................................ 263
Deposit Insurance and Credit Guarantee Corporation of India .............................................. 266
Macro-Prudential Indicators Review ....................................................................................... 268

VII. PUBLIC DEBT MANAGEMENT ............................................................................................ 276

Central Government ............................................................................................................... 277
State Governments ................................................................................................................. 286

VIII. CURRENCY MANAGEMENT ................................................................................................ 293

Banknotes in Circulation ......................................................................................................... 293
Coins in Circulation ................................................................................................................. 294
Currency Operations .............................................................................................................. 295

ii
 CONTENTS

Page No.

IX. PAYMENT AND SETTLEMENT SYSTEMS AND INFORMATION TECHNOLOGY ............ 302
Payment and Settlement Systems ......................................................................................... 302
Developments in Payments and Settlement Systems ............................................................ 304
Developments in Use of Information Technology ................................................................... 312

X. HUMAN RESOURCES DEVELOPMENT AND ORGANISATIONAL MATTERS ................ 316

Human Resource Initiatives .................................................................................................... 316
Other Initiatives ....................................................................................................................... 321
Research Activities ................................................................................................................. 337
Central Board and its Committees ......................................................................................... 345

XI. THE RESERVE BANK’S ACCOUNTS FOR 2008-09 ........................................................... 348

Income and Expenditure ......................................................................................................... 348
Balance Sheet ........................................................................................................................ 352
Significant Accounting Policies and Notes to the Accounts for 2008-09 ................................ 358

Annex I : List of Speeches by Governor and Deputy Governors ................................ 362

Annex II : List of Reports of Groups/Committees ......................................................... 364
Annex III : List of Publications by the Staff of the Reserve Bank:
June 2008 to July 2009 .................................................................................... 365
Annex IV : Visits of Foreign Delegations to The Reserve Bank .................................... 368
Annex V : Chronology of Major Policy Announcements: April 2008-July 2009 .......... 369

BOXES
II.1 Counter-Cyclical Fiscal Policy in the Current Economic Scenario ................................... 37
II.2 Fiscal Transparency at the State Level ............................................................................ 42
II.3 Permanent and Transitory Output Loss ............................................................................ 51
II.4 Growth Cycles in India: Recent Evidence of Cyclical Slowdown ..................................... 52
II.5 Rationalisation of MSP Computation ............................................................................... 56
II.6 Global Agricultural Outlook .............................................................................................. 60
II.7 Global Climate Change: Emerging Challenges for Indian Agriculture ............................. 62
II.8 Performance of the Electricity Sector ............................................................................... 68
II.9 Industrial Performance – Select Economies .................................................................... 71
II.10 Global Recession and the Services Sector ..................................................................... 73
II.11 Effects of Global Recession on Unemployment in India .................................................. 75
II.12 Financial Crisis and Economic Growth: An Inter-temporal Perspective ........................... 78
II.13 The Management of Economic Slowdown: Rebalancing of Growth ................................ 79
II.14 Report of the High Level Committee on Estimation of Saving and
Investment ........................................................................................................................ 81

iii
 CONTENTS

Page No.

II.15 Adjusted Reserve Money and Money Multiplier ............................................................... 85

II.16 The Deflation Perceptions ................................................................................................ 102
II.17 Pass-through of Exchange Rate Movements to Inflation in India .................................... 105
II.18 WPI and CPIs : Divergence in Inflation ............................................................................ 108
II.19 CPI for the Urban and Rural Population: The Approach .................................................. 109
II.20 Wealth Effects of Corrections in Stock Prices in India ..................................................... 110
II.21 House Price Index: Recent Developments ....................................................................... 111
II.22 Housing Start-Up Index in India ....................................................................................... 112
II.23 Fiscal Stimulus Measures: Cross-Country Evidence ....................................................... 118
II.24 Role of Automatic Fiscal Stabilisers ................................................................................. 119
II.25 Fiscal Stimulus and Debt Sustainability in India .............................................................. 123
II.26 Implementation of Fiscal Responsibility Laws at
State Level –Recent Developments ................................................................................. 130
II.27 Policy Response of the Reserve Bank since mid-September 2008 ................................ 140
II.28 Turmoil in Global Financial Markets – Impact on Indian Capital Market .......................... 152
II.29 Mutual Funds Industry in India - Current Issues .............................................................. 155
II.30 Globalisation and the Pattern of World Growth: Issues of Decoupling ............................ 160
II.31 Impact of the Global Crisis on India’s Exports ................................................................. 165
II.32 The Export Demand Function for India: Some Inferences on
the Impact of the Global Recession on India ................................................................... 168
II.33 Software Exports: Outlook and Prospects ....................................................................... 172
II.34 Impact of Global Slowdown on Remittances ................................................................... 175
II.35 Global Financial Crisis and Capital Flows ........................................................................ 178
II.36 Trade Credit ...................................................................................................................... 181
III.1 Changing Stance of Monetary Policy in India .................................................................. 200
III.2 Central Banks’ Unconventional Policy Measures - International
Experience on Liquidity Support to Non-banking Financial Entities ................................ 205
IV.1 Augmentation of the Resource Base of SIDBI, NHB and NABARD ................................ 212
IV.2 Draft Report of the High Level Committee to Review the Lead Bank Scheme ............... 219
IV.3 Financial Inclusion: Policy Prescriptions .......................................................................... 223
IV.4 Implementation of Recommendations of the Working Groups on
Improvement of Banking Services in Different States/Union Territories .......................... 225
IV.5 Technical Group for Review of Legislation on Money Lending ........................................ 226
IV.6 Financial Literacy and Credit Counselling Centres – Model Scheme .............................. 228
V.1 Separate Trading of Registered Interest and Principal of
Securities (STRIPS) – Operational Guidelines ................................................................ 234
V.2 Inter-Regulatory Coordination .......................................................................................... 239
VI.1 Global Financial Crisis and the Indian Banking System:
An Assessment of MTM Losses ....................................................................................... 244

iv
 CONTENTS

Page No.

VI.2 Major Recommendations of the Committee on Financial

Sector Assessment (CFSA) ............................................................................................. 246
VI.3 Risk Management: Role of Stress Testing ....................................................................... 249
VI.4 Committee on Customer Services ................................................................................... 255
VI.5 Merger and Amalgamation of UCBs ................................................................................ 260
VI.6 Revival of Co-operative Credit Structure .......................................................................... 261
VI.7 Liquidity Crisis – Implications for NBFCs ......................................................................... 265
VI.8 Evolving Regulatory Changes in Response to the Crisis: The Indian Position ................ 267
VII.1 Debt Management and the Global Financial Crisis ......................................................... 279
VII.2 Private Placement of Sovereign Debt with the Central Banks –
Cross-country Practices ................................................................................................... 283
VIII.1 Steps taken by the Reserve Bank to curb currency counterfeiting .................................. 300
IX.1 Mobile Banking : Select Country Experiences ................................................................. 310
IX.2 Pre-paid Payment Instruments in India ............................................................................ 311
IX.3 Work Flow and Knowledge Management ........................................................................ 313
IX.4 Virtual Private Networks: Safety and Efficiency Parameters ........................................... 314
X.1 Commemoration of Reserve Bank’s Platinum Jubilee Year ............................................. 328
X.2 ISO Certifications in the Bank .......................................................................................... 332
X.3 IS Audit Policy ................................................................................................................... 333
X.4 Major Decisions of the Central Information Commission (CIC) ....................................... 336
X.5 Expert Committee on Research Funding Policy .............................................................. 341

CHARTS
II.1 Inter-Temporal Progress of Monsoon ............................................................................... 54
II.2 Spatial Distribution of Monsoon ....................................................................................... 54
II.3 Performance of 17 Two-Digit Manufacturing Industries
During Slowdown in the Past ........................................................................................... 64
II.4 Performance of 17 Two-Digit Industries During
Slowdown in 2007-08 and 2008-09 .................................................................................. 65
II.5 Growth in Six Infrastructure Industries ............................................................................. 67
II.6 Growth Trend in Services Sector ...................................................................................... 72
II.7 Services Exports and GDP Originating from Services Sector ......................................... 74
II.8 Gross Domestic Saving .................................................................................................... 80
II.9 Reserve Money Growth .................................................................................................... 84
II.10 Important Sources of Reserve Money Variation .............................................................. 87
II.11 Broad Money Growth ....................................................................................................... 87
II.12 Currency in Circulation and WPI Inflation ........................................................................ 89
II.13 Fortnightly Variation in Currency in Circulation ................................................................ 89

v
 CONTENTS

Page No.

II.14 Time Deposits Growth Rates ........................................................................................... 89

II.15 Time Deposits and Small Savings ................................................................................... 90
II.16 Non-Food Credit Growth .................................................................................................. 91
II.17 Bank Credit and Investment in Government Securities ................................................... 92
II.18 Income Velocity of Money ................................................................................................. 92
II.19 SLR Investment by Scheduled Commercial Banks ......................................................... 94
II.20 Global Inflation ................................................................................................................. 95
II.21 Volatility in CPI Inflation .................................................................................................... 97
II.22 Increase in International Commodity Prices (year-on-year) ............................................ 99
II.23 Annual WPI Inflation ......................................................................................................... 103
II.24 Food Price Inflation .......................................................................................................... 103
II.25 Asset Price Movements .................................................................................................... 109
II.26 Deficit Indicators of the Central Government ................................................................... 115
II.27 Debt Service Burden of the Central Government ............................................................ 120
II.28 Major Deficit Indicators of the State Governments .......................................................... 121
II.29 Indicators of Global Financial Market Developments ....................................................... 137
II.30 Movement of the LAF and Call Money Rate .................................................................... 142
II.31 Volumes and Rates in the Money Market ........................................................................ 142
II.32 Movement of WADR of CD and Average Call Money Rate ............................................. 144
II.33 Movement of WADR of CPs and Average Call Money Rate ............................................ 144
II.34 Nominal and Real Exchange Rates of Indian Rupee ...................................................... 145
II.35 Rupee-US Dollar Forward Premia ................................................................................... 146
II.36 Average Daily Turnover in the Foreign Exchange Market ................................................ 146
II.37 Yield on Government Bonds ............................................................................................ 147
II.38 Yield and Trading Turnover in Government Securities ..................................................... 148
II.39 Resource Mobilisation in Primary Market ........................................................................ 151
II.40 Key Global Indicators ....................................................................................................... 159
II.41 Key Balance of Payments Indicators ................................................................................ 163
II.42 External Demand and India’s Export Growth ................................................................... 164
II.43 Exports Growth of India vis-a-vis Advanced Economies and
EMEs during October 2008-April 2009 ............................................................................ 166
II.44 India’s Export Growth - Principal Commodities (April-February) ..................................... 166
II.45 India’s Import Growth - Principal Commodities (April-February) ..................................... 167
II.46 Monthly Movements in Exports, Imports and Trade Balance ........................................... 169
II.47 India’s Gross Invisible Receipts ....................................................................................... 169
II.48 Growth of India's Software Services Exports ................................................................... 171
II.49 Movements in Oil Price and Remittance Inflows to India ................................................. 174

vi
 CONTENTS

Page No.

II.50 Movements in Monthly FDI and Net Portfolio Inflows ...................................................... 179
III.1 Cash Reserve Ratio ......................................................................................................... 201
III.2 MSS Buyback and Issuance of Central Government Securities ...................................... 204
III.3 Outstanding LAF, MSS and GOI Balance ........................................................................ 206
III.4 Report(+)/Reverse Repo(-) Under LAF ............................................................................ 206
VI.1 Extension of Protection Accorded to the Depositors ....................................................... 266
VI.2 Frequency Distribution of CRAR of Reporting NBFCs .................................................... 269
VII.1 Weighted Average Yield of Primary Issues of Dated Securities ...................................... 280
VII.2 Primary Market Yields of Treasury Bills ............................................................................ 284
VII.3 Cash Balances of the Central Government ..................................................................... 285
VII.4 Weighted Average Yield on SDLs and Yield to Maturity (YTM) on
10-year Central Government Security .............................................................................. 288
VIII.1 Currency and Major Aggregates ...................................................................................... 294
VIII.2 Banknotes in Circulation : End-March 2009 ..................................................................... 295
IX.1 Share of Paper-based versus Electronic Transactions .................................................... 306
IX.2 Trends in Real time Gross Settlement (RTGS) Transactions ........................................... 308
X.1 Total Staff Strength of the Reserve Bank ......................................................................... 324
XI.1 Sources of Income ........................................................................................................... 349
XI.2 Major Items of Expenditure .............................................................................................. 352
XI.3 Trends in Foreign Currency and Domestic Assets (as at end of June) ........................... 354

TEXT TABLES
2.1 Growth Rates of Real GDP .............................................................................................. 50
2.2 Agricultural Production ..................................................................................................... 53
2.3 Season-wise Agricultural Production ............................................................................... 53
2.4 Gross Capital Formation in Agriculture ............................................................................ 57
2.5 Management of Food Stocks ........................................................................................... 59
2.6 Growth Performance of Industrial Sector based on
Index of Industrial Production (IIP) ................................................................................... 63
2.7 Phases of Slowdown in Indian Industry ........................................................................... 63
2.8 Index of Industrial Production: Sectoral and Use-based
Classification of Industries ............................................................................................... 65
2.9 Trends in Growth of Consumer Goods ............................................................................. 66
2.10 Capacity Utilisation ........................................................................................................... 67
2.11 Targets and Achievements of Infrastructure Industries .................................................... 69
2.12 Performance of Central Sector Projects ........................................................................... 69
2.13 Industrial Investment Proposals ....................................................................................... 70

vii
 CONTENTS

Page No.

2.14 Performance of Micro, Small and Medium Enterprises .................................................... 71

2.15 Performance of the Services Sector ................................................................................ 74
2.16 Indicators of Services Sector Activity ............................................................................... 74
2.17 Demand Side of GDP-Shares .......................................................................................... 76
2.18 Demand Side of GDP - Growth Rates ............................................................................. 77
2.19 Gross Capital Formation .................................................................................................. 80
2.20 Household Saving in Financial Assets ............................................................................. 82
2.21 Reserve Money – Variations ............................................................................................ 86
2.22 Monetary Indicators .......................................................................................................... 88
2.23 Operations of Scheduled Commercial Banks .................................................................. 90
2.24 Credit Flow from Scheduled Commercial Banks ............................................................. 91
2.25 Non-food Bank Credit - Sectoral Deployment .................................................................. 92
2.26 Flow of Resources to Commercial Sector ........................................................................ 93
2.27 Scheduled Commercial Banks’ Non-SLR Investments .................................................... 94
2.28 Global Inflation Indicators ................................................................................................. 97
2.29 Nominal and Real Policy Rates : Select Countries .......................................................... 98
2.30 International Commodity Prices ....................................................................................... 98
2.31 Key Commodity Price Movements – Global vis-à-vis Domestic ...................................... 100
2.32 Wholesale Price Inflation in India ..................................................................................... 104
2.33 Consumer Price Inflation - Major Groups ......................................................................... 107
2.34 Major Fiscal Indicators: Combined Finances ................................................................... 114
2.35 Major Fiscal Indicators of the Central Government ......................................................... 115
2.36 Subsidies of the Centre .................................................................................................... 116
2.37 Key Deficit Indicators of the Centre for 2008-09 - Provisional Accounts ......................... 120
2.38 Average Interest Rates on Outstanding Domestic Liabilities of the Centre ..................... 120
2.39 Indicators of Combined Finances of the Centre and States ............................................ 122
2.40 Combined Liabilities of the Centre and States ................................................................. 123
2.41 Outstanding Government Guarantees ............................................................................. 124
2.42 Decomposition of the GFD of the Central Government .................................................. 125
2.43 Revenue Position of the Central Government .................................................................. 126
2.44 Gross Tax Revenues of the Central Government ............................................................. 126
2.45 Expenditure Pattern of the Central Government .............................................................. 127
2.46 Expenditure on Select Development Heads of the Central Government ......................... 127
2.47 Financing Pattern of Gross Fiscal Deficit of the Central Government ............................. 128
2.48 Eleventh Plan Projections for the Central Government vis-à-vis the Budget Estimates .. 128
2.49 Deficit and Debt Indicators of the Central Government-Select Countries ....................... 128
2.50 Major Deficit Indicators of the State Governments .......................................................... 129

viii
 CONTENTS

Page No.

2.51 Aggregate Receipts of the State Governments ............................................................... 131

2.52 Expenditure Pattern of the State Governments ............................................................... 132
2.53 Decomposition and Financing Pattern of Gross Fiscal Deficit of States ......................... 133
2.54 Measures of Deficit of the Central and State Governments ............................................ 133
2.55 Combined Receipts and Disbursement of the Centre and States ................................... 134
2.56 Financing of Gross Fiscal Deficit of the Centre and States ............................................. 134
2.57 Combined Expenditure of the Centre and States on Social Sector ................................. 135
2.58 International Stock Markets .............................................................................................. 138
2.59 Appreciation (+)/Depreciation (-) of the US dollar vis-à-vis other Currencies ................. 138
2.60 Domestic Markets at a Glance ......................................................................................... 141
2.61 Activity in Money Market Segments ................................................................................. 143
2.62 Commercial Paper-Major Issuers ..................................................................................... 144
2.63 Purchase and Sales of US dollar by the Reserve Bank .................................................. 145
2.64 Movements in Deposit and Lending Rate ........................................................................ 148
2.65 Changes in Deposit and Lending Rates .......................................................................... 149
2.66 Mobilisation of Resources from the Primary Market ........................................................ 150
2.67 Indian Equity Markets - Key Indicators ............................................................................. 153
2.68 BSE Sectoral Stock Indices .............................................................................................. 153
2.69 Trends in Institutional Investments ................................................................................... 153
2.70 Resource Mobilisation by Mutual Funds .......................................................................... 154
2.71 Funds Mobilised by Mutual Funds - Type of Schemes .................................................... 156
2.72 Resources Raised by way of Bonds/Debentures by Select All-India FIs ......................... 156
2.73 Direction of India’s Exports .............................................................................................. 166
2.74 Direction of India’s Imports ............................................................................................... 167
2.75 Balance of Payments : Key Indicators .............................................................................. 170
2.76 Structure of India’s Service Exports ................................................................................. 171
2.77 India’s Share in World Exports of Goods and Services ................................................... 171
2.78 Computer & Information Services Exports ....................................................................... 173
2.79 Foreign Tourists Arrival in India and Outbound Tourist Traffic .......................................... 173
2.80 Non-Software Miscellaneous Receipts & Payments ........................................................ 173
2.81 Composition of Private Transfers to India ......................................................................... 174
2.82 Migrant Remittances: Top Recipients ............................................................................... 174
2.83 Trade and Current Account Balances in Select Countries ............................................... 176
2.84 Gross Capital Inflows and Outflows ................................................................................. 177
2.85 Foreign Investment Flows to India ................................................................................... 179
2.86 Foreign Direct Investment Flows to India: Country-wise and Industry-wise .................... 180
2.87 India’s Direct Investment Abroad ..................................................................................... 180

ix
 CONTENTS

Page No.

2.88 India’s Grants and Loans to Foreign Governments ......................................................... 182

2.89 Balances under NRI Deposit Schemes ............................................................................ 182
2.90 Ceiling Interest rates on NRI Deposits ............................................................................. 182
2.91 India’s External Debt ........................................................................................................ 183
2.92 External Debt Service Payments ..................................................................................... 183
2.93 International Comparison of Top Ten Debtor Countries, 2007 ......................................... 184
2.94 Sources of Variation in Foreign Exchange Reserves ....................................................... 184
2.95 Foreign Exchange Reserves of the Major EMEs ............................................................. 185
2.96 Deployment Pattern of Foreign Currency Assets ............................................................. 186
2.97 International Investment Position of India ........................................................................ 186
3.1 Movement in Key Policy Rates and Reserve Requirements ............................................ 192
3.2 Reserve Bank’s Liquidity Management Operations ......................................................... 202
3.3 Monthly Primary Liquidity Flows and Open Market Operations ....................................... 202
3.4 Indicators of Liquidity ........................................................................................................ 204
3.5 Reserve Bank’s Holdings of Central Government Dated Securities ................................ 207
3.6 Reverse Repo/Repo Bids under LAF ............................................................................... 208
4.1 Priority Sector Advances .................................................................................................. 213
4.2 Disbursements under Special Agricultural Credit Plans .................................................. 214
4.3 Targets and Actual Disbursement to Agriculture by Banks .............................................. 214
4.4 Outstanding Agricultural Advances .................................................................................. 215
4.5 Public Sector Banks – Recovery of Direct Agricultural Advances ................................... 215
4.6 Proposed Reimbursement ................................................................................................ 216
4.6 Outstanding Credit to Micro and Small Enterprises ......................................................... 217
4.7 Credit to Sick Micro and Small Enterprises ..................................................................... 217
4.8 Bank Credit to Minority Communities by SCBs under Priority Sector Advances ............ 221
4.9 Bank Loans Outstanding against SHGs as on March 31, 2008 ...................................... 221
6.1 Health of Scheduled Commercial Banks in India ............................................................. 242
6.2 Offices of Indian Banks Opened Abroad – Between July 2008 and June 2009 .............. 247
6.3 Offices of Foreign Banks Opened in India – Between July 2008 and June 2009 ............ 248
6.4 Timeframe for Implementation of Advanced Approaches in India ................................... 248
6.5 Resolution of NPAs ........................................................................................................... 250
6.6 Frauds in the Banking Sector ........................................................................................... 257
6.7 Utilisation of Refinance Facilities ...................................................................................... 263
6.8 Select Financial Indicators ............................................................................................... 268
6.9 Scheduled Commercial Banks – Frequency Distribution of CRAR ................................. 269
6.10 CRAR and Net NPAs of Select Financial Institutions (End-March 2009) ........................ 269

x
 CONTENTS

Page No.

6.11 Scheduled Commercial Banks - Performance Indicators ................................................ 270

6.12 Net NPA to Net Advances of Scheduled Commercial Banks ........................................... 271
6.13 Net NPAs to Net Advances of SUCBs .............................................................................. 271
6.14 Scheduled Commercial Banks – Cost of Funds and Return on Funds ........................... 272
6.15 Operational Results of Scheduled Commercial Banks – Key Ratios ............................... 272
6.16 Operational Results of Scheduled Commercial Banks: 2008-09 ..................................... 273
6.17 Operational Results of SUCBs – Key Ratios ................................................................... 273
7.1 Gross and Net Market Borrowings of the Central Government ....................................... 278
7.2 Central Government’s Market Loans- A Profile ................................................................ 281
7.3 Primary Cut-Off Yield and Prevailing Secondary Market Yield ........................................ 281
7.4 Maturity Profile of Central Government Dated Securities ................................................ 282
7.5 Treasury Bills in the Primary Market ................................................................................ 284
7.6 Annual Market Borrowings of State Governments ........................................................... 286
7.7 Yield on State Government Securities ............................................................................. 287
7.8 Month-wise Market Borrowings of State Governments ................................................... 287
7.9 Weighted Average Spreads during 2008-09 .................................................................... 288
7.10 Frequency Distribution of Tranches of Auctions during 2008-09 ...................................... 288
7.11 Maturity Profile of Outstanding State Development Loans and Power Bonds ................. 289
7.12 WMA/Overdrafts of the State Governments .................................................................... 290
7.13 State-wise Availment of WMA/Overdraft .......................................................................... 290
7.14 Investments of the State Governments/UT ...................................................................... 291
8.1 Banknotes in Circulation .................................................................................................. 294
8.2 Coins in Circulation .......................................................................................................... 295
8.3 Currency Chests ............................................................................................................... 295
8.4 Small Coin Depots ............................................................................................................ 296
8.5 Volume of Banknotes Indented and Supplied .................................................................. 296
8.6 Value of Banknotes Indented and Supplied ..................................................................... 297
8.7 Supply and Cost of Banknotes ......................................................................................... 297
8.8 Indent and Supply of Coins (Volume) ............................................................................... 298
8.9 Indent and Supply of Coins (Value) .................................................................................. 298
8.10 Disposal of Soiled Notes and Supply of Fresh Banknotes ............................................... 299
8.11 Counterfeit Notes Detected .............................................................................................. 299
8.12 Number of Counterfeit Notes Detected at the Reserve Bank and Bank Branches ......... 299
9.1 Payment System Indicators - Annual Turnover ................................................................ 304
9.2 Retail Electronic Funds Transfer Systems ........................................................................ 307

xi
 CONTENTS

Page No.

9.3 Card-Based Payment Transactions .................................................................................. 307

9.4 Evaluation of Critical IT Implementation: 2008-09 ........................................................... 314
10.1 Reserve Bank Training Establishments - Programmes Conducted ................................. 317
10.2 Select Programmes/ Seminars/ Workshops Conducted by
Training Colleges during 2008-09 .................................................................................... 318
10.3 Number of Officers Trained in External Training Institutions in India and Abroad ............ 319
10.4 Courses Conducted under Joint India- IMF Training Programme-Pune .......................... 319
10.5 Recruitment by the Reserve Bank - 2008 ........................................................................ 323
10.6 Staff Strength of Reserve Bank ....................................................................................... 324
10.7 Category-wise Actual Staff Strength (As on December 31, 2008) .................................. 325
10.8 Department-wise Staff Strength of the Reserve Bank ..................................................... 326
10.9 Reserve Bank’s Office-wise Strength of Staff .................................................................. 327
10.10 Right to Information Act, 2005 – Requests Received and Resolved during the year ...... 335
11.1 Trends in Gross Income, Expenditure and Net Disposable Income ................................ 348
11.2 Gross Income ................................................................................................................... 349
11.3 Contingency and Asset Development Reserves and
Surplus Transfer to the Government ................................................................................ 350
11.4 Earnings from Foreign Sources ....................................................................................... 350
11.5 Earnings from Domestic Sources .................................................................................... 351
11.6 Expenditure ...................................................................................................................... 351
11.7 Balances in Currency and Gold Revaluation Account and
Exchange Equalisation Account ....................................................................................... 353
11.8 Balances in Contingency Reserve and Asset Development Reserve ............................. 354
11.9 Outstanding Foreign Currency and Domestic Assets ...................................................... 354
11.10 Investments in Shares of Subsidiaries/Associate Institutions .......................................... 354

APPENDIX TABLES
1 Select Macroeconomic and Financial Indicators .............................................................. 399
2 Growth Rates and Sectoral Composition of
Real Gross Domestic Product (At 1999-2000 prices) ...................................................... 400
3 Quarterly Growth Rates and Composition of Real Gross Domestic Product
(At 1999-2000 prices) ....................................................................................................... 401
4 Agricultural Production ..................................................................................................... 402
5 Procurement, Off-take and Stocks of Foodgrains ............................................................ 403
6 Trends in Index of Industrial Production (Base: 1993-94=100) ........................................ 404
7 Growth in Index of Seventeen Major Industry Groups of Manufacturing Sector
(Base : 1993-94=100) ....................................................................................................... 405
8 Frequency Distribution of Growth Rates of Seventeen Major Industry
Group of Manufacturing Sector - 2004-05 to 2008-09 ..................................................... 406

xii
 CONTENTS

Page No.

9 Use-Based Classification of Industrial Production (Base: 1993-94=100) ........................ 407

10 Growth of Six Infrastructure Industries (Base: 1993-94=100) ......................................... 408
11 Gross Domestic Saving and Investment .......................................................................... 409
12 Financial Saving of the Household Sector (Gross) .......................................................... 410
13 Variations in Reserve Money ........................................................................................... 411
14 Reserve Bank of India (RBI) Survey ................................................................................ 412
15 Variations in Money Stock ................................................................................................ 413
16 New Monetary Aggregates ............................................................................................... 414
17 Liquidity Aggregates ......................................................................................................... 415
18 Important Banking Indicators - Scheduled Commercial Banks ....................................... 416
19 Commercial Bank Survey ................................................................................................. 417
20 Sectoral Deployment of Gross Bank Credit ..................................................................... 418
21 Industry-Wise Deployment of Gross Bank Credit ............................................................ 419
22 Reserve Bank’s Accommodation to Scheduled Commercial Banks ................................ 420
23 Variations in Index Numbers of Wholesale Prices ........................................................... 421
24 Variations in Wholesale Prices - Weighted Contributions ................................................ 422
25 Variations in Price Indices (Year-on-Year) ........................................................................ 423
26 Measures of deficit of the Central Government ............................................................... 424
27 Major Items of Receipts and Expenditures of the Central Government .......................... 425
28 Financing of Gross Fiscal Deficit of the Central Government .......................................... 426
29 Outstanding Liabilities of the Central Government .......................................................... 427
30 Budgetary Operations of the State Governments ............................................................ 428
31 Financing of Gross Fiscal Deficit and
Outstanding Liabilities of State Governments .................................................................. 429
32 Direct and Indirect Tax Revenues of the Central and the State Governments ................ 430
33 Combined Receipts and Disbursements of the Central and State Governments ........... 431
34 Market Borrowings of the Central and State Governments ............................................. 432
35 Repo/Reverse Repo Auctions Under Liquidity Adjustment Facility ................................. 433
36 Issue of Certificates of Deposit by Scheduled Commercial Banks .................................. 441
37 Commercial Paper ............................................................................................................ 442
38 Indices of Real Effective Exchange Rate (REER) and
Nominal Effective Exchange Rate (NEER) of the Indian Rupee ..................................... 443
39 Inter-Bank and Merchant Transactions in the Foreign Exchange Market ........................ 444
40 Secondary Market Transactions in Government Securities ............................................. 446
41 Interest Rate Structure of Scheduled Commercial Banks ............................................... 446

xiii
 CONTENTS

Page No.
42 New capital Issues by Non-Government Public Limited Companies ............................... 447
43 Domestic Stock Indices .................................................................................................... 448
44 Major Indicators of Domestic Equity Markets ................................................................... 449
45 Turnover in the Equity Derivatives Market ........................................................................ 450
46 Assistance Sanctioned and Disbursed by Financial Institutions ...................................... 451
47 Select Economic Indicators - World ................................................................................. 452
48 India’s Foreign Trade ........................................................................................................ 453
49 India’s Exports of Principal Commodities ......................................................................... 454
50 India’s Imports of Principal Commodities ......................................................................... 455
51 India’s Overall Balance of Payments ................................................................................ 456
52 Invisibles by Category of Transactions ............................................................................. 457
53 Composition of Capital Flows (Net).................................................................................. 458
54 External Assistance .......................................................................................................... 459
55 India’s External Debt (As at end-March) .......................................................................... 460
56 India’s Foreign Exchange Reserves ................................................................................. 462
57 Interest Rates on Export Credit ........................................................................................ 463
58 Profile of Central Government Dated Securities .............................................................. 464
59 Issuances of Central Government Dated Securities ........................................................ 465
60 Additional Issuance of Treasury Bills during 2008-09 ...................................................... 467
61 Profile of Treasury Bills ..................................................................................................... 468
62 Market Borrowings Programme of the State Governments/Union Territories - 2008-09 . 469
63 Weighted Average Yields and Spreads in Auction of SDLs during 2008-09 .................... 470
64 Market Borrowings of the State Governments/U.T. Raised Through Auctions ................ 471
65 Maturity Profile of Outstanding Securities of State Governments/U.T. ............................ 475
66 Normal WMA Limits of States/UT .................................................................................... 476

xiv