CONTENTS

PART ONE: THE ECONOMY - REVIEW AND PROSPECTS

I.

ASSESSMENT AND PROSPECTS

Assessment of 2011-12

Prospects for 2012-13

Medium-Term Challenges for the Indian Economy .

II.

ECONOMIC REVIEW

The Real Economy

Price Situation

Money and Credit

Financial Markets

Government Finances

External Sector

PART TWO: THE WORKING AND OPERATIONS OF THE RESERVE BANK OF INDIA

III.

MONETARY POLICY OPERATIONS

Monetary Policy Operations: Context and Rationale

IV.

CREDIT DELIVERY AND FINANCIAL INCLUSION

Credit Delivery

Financial Inclusion

Financial Literacy Initiatives

V.

DEVELOPMENT AND REGULATION OF FINANCIAL MARKETS

Government Securities Market

Foreign Exchange Market

Derivatives Market

VI.

REGULATION, SUPERVISION AND FINANCIAL STABILITY

Financial Stability Assessment

Assessment of the Banking Sector

Major Decisions Taken by Board for Financial Supervision

Commercial Banks

Customer Service

Banking Standards and Codes Board of India

Urban Co-operative Banks

Rural Co-operatives

Deposit Insurance and Credit Guarantee Corporation

Non-Banking Financial Companies

VII.

PUBLIC DEBT MANAGEMENT

Debt Management of the Central Government

Debt Management of State Governments

VIII.

CURRENCY MANAGEMENT

Banknotes in Circulation

Coins in Circulation

Currency Operations

Clean Note Policy

Counterfeit Banknotes

Expenditure on Security Printing and Distribution

IX.

PAYMENT AND SETTLEMENT SYSTEMS AND INFORMATION TECHNOLOGY

Vision Document 2009-12

Payment System Oversight

Other Developments

Information Technology

X.

GOVERNANCE, HUMAN RESOURCES DEVELOPMENT AND ORGANISATIONAL MANAGEMENT

Initiatives for Improved Governance

Initiatives for Improved Communication

Human Resource Development Initiatives

Initiatives in Organisation Management

XI.

THE RESERVE BANK’S ACCOUNTS FOR 2011-12

Income  

Expenditure

Balance Sheet

Significant Accounting Policies and Notes to the Accounts for the Year 2011-12 .

1. Macroeconomic and Financial Indicators

2. Growth Rates and Sectoral Composition of Real Gross Domestic Product

3. Gross Domestic Saving and Investment

4. Financial Saving of the Household Sector (Gross)

5. Agricultural Production

6. Procurement, Off-Take and Stocks of Foodgrains

7. Trends in Index of Industrial Production

8. Variations in Index Numbers of Wholesale Prices

9. Variations in Reserve Money

10. Variations In Money Stock

11. Sectoral Deployment of Gross Bank Credit

12. Capital Market - Primary and Secondary

13. Turnover in Indian Derivatives Market

14. Indices of Real Effective Exchange Rate (Reer) and Nominal Effective Exchange Rate (Neer) of the Indian Rupee

15. Key Fiscal Indicators

16. Budgetary Operations of the State Governments .

17. India’s Exports and Imports

18. India’s Overall Balance of Payments

19. Foreign Direct Investment Flows to India: Country-Wise and Industry-wise.

20. India’s Foreign Exchange Reserves

21. India’s External Debt

BOXES

II.1 Structural Change Index – A cross-country comparison

II.2 Is Output Gap a Leading Indicator of Inflation?

II.3 Capacity Utilisation: Concept and Measurement in India

II.4 Impact of Monetary Policy and External Demand on Services Sector Growth

II.5 Supply Chain Management in Agriculture: Farm Gate to Retail Market

II.6 Need for Revamping Coal Policy to Address Supply Shortages and Suppressed Inflation

II.7 Rupee Depreciation Impact on Inflation

II.8 The Risk of Wage-Price Spiral: What the Empirical Evidence for India Suggests

II.9 Demand for Money

II.10 Interest Rate and Credit Channels of Monetary Transmission

II.11 Euro Area Crisis – An Assessment of Policy Action

II.12 Financial Conditions Index

II.13 Impact of OMO on G-sec Market Trading Activity

II.14 Sustainability of Public Debt

II.15 Divestment Policy in India

II.16 Fiscal Multipliers in India

II.17 Fiscal Implications of Contingent Liabilities of the States

II.18 Determinant of Gold Demand in India

III.1 Base Rate System: An Assessment

III.2 Deregulation of Savings Bank Deposit Interest Rate – Rationale and Impact

III.3 Bank Rate Alignment with the MSF Rate

III.4 Liquidity Management Operations

IV.1 Committee on Priority Sector Lending

IV. 2 Electronic Benefit Transfer (EBT) and its convergence with Financial Inclusion Plan (FIP)

IV.3 Outreach Programme of the Reserve Bank

V.1 Working Group on Enhancing Liquidity in the G-Sec and Interest Rate Derivatives Markets

VI.1 NPAs and Credit Cycle

VI.2 Impact of Volcker Rule on India

VI.3 NBFCs - Infrastructure Debt Fund

VI.4 NBFC-Micro Finance Institutions

VI.5 Recommendations of the Working Group on the Issues and Concerns in the NBFC Sector

VI.6 Non-Financial Activities of NBFCs

VIII.1 Demand for Coins

IX.1 Domestic Money Transfer

IX.2 Payment Systems: Emerging Messaging Standards

IX.3 Desktop Virtualisation

CHARTS

II.1 GDP Growth .

II.2 Expenditure Side of GDP

II.3 Household Financial Savings

II.4 Comparison of South-west Monsoon and Agriculture Conditions in 2009 and 2012

II.5 Industrial Growth

II.6 Industrial Growth - by Classification

II.7 Growth in Infrastructure Industries

II.8 Relation between Manufacturing and Electricity growth

II.9 Growth in Services Sector GDP

II.10 Implementation of Road Projects by NHAI

II.11 Employment

II.12 Inflation Trends and Volatility

II.13 Trends in Wholesale Price Inflation

II.14 Weighted Contribution (in per cent) to Inflation Major Groups

II.15 Trends in Food Inflation

II.16 Global and Domestic Fuel Prices

II.17 Non-food Manufactured Products (NFMP) Index, Inflation and Month-over-Month Seasonally Adjusted Annualised Changes

II.18 Trends in Global Commodity Prices

II.19 Trends in Wages and Staff Costs

II.20 Increase in CPI for Rural Labourers (CP-RL) and Rural Wages

II.21 WPI and CPI Inflation

II.22 Growth in Reserve Money

II.23 Money Multiplier

II.24 Growth in Broad Money and Reserve Money

II.25 Non-food Credit Growth

II.26 Aggregate Deposits and Bank Credit of SCBs

II.27 Indicators of Global Financial Market Developments

II.28 Transmission of Policy Rates to Financial Markets

II.29 Activities in Domestic Money and G-Sec Markets

II.30 Movements in Equity Markets

II.31 Exchange Rate Movements against Major Currencies

II.32 Trends in Housing Market

II.33 Key Deficit Indicators of the Central Government

II.34 Trends in General Government Revenue

II.35 Disinvestment Receipts - Budgeted vs Actuals

II.36 Comparison between GFD and Financing Gap (FGP)

II.37 Major Subsidies of the Central Government

II.38 Exports and Imports

II.39 Trends in the Major Components of Balance of Payments

II.40 Growth of Major Components of Invisibles Receipts

II.41 Trends in Major Components of Capital Flows (Net)

II.42 External Debt Indicators

II.43 Movements in Major EDEs Currencies vis-a-vis US dollars

II.44 Exchange Rate Flexibility in India

III.1 Movement of Call Money Rate

VII.1 Cash Balance of the Central Government

VIII.1 Cost of Security Printing

TEXT TABLES

II.1 Savings and Investment Rate

II.2 Episodes of High Inflation in India: 1971 to 2012 .

II.3 WPI and New-CPI (Combined) Inflation

III.1 Movements in Key Policy Variables

IV.1 Priority Sector Lending by SCBs

IV.2 Recovery of Direct Agriculture Advances

IV.3 Amount Reimbursed by the Central Government to Lending Institutions

IV.4 Credit to MSE sector by SCBs .

IV.5 Key Statistics on Financial Inclusion in India: A Survey

IV.6 Progress of SCBs in Financial Inclusion Plan (excluding RRBs)

VI.1 Select Financial Indicators

VI.2 Bank Group wise NPA Ratios

VI.3 Actions Against AML/KYC/CFT Violations

VI.4 Year-wise Progress in Mergers/acquisitions as on March 31, 2012

VI.5 State-wise Progress in Mergers/acquisition of UCBs

VII.1 Gross and Net Market Borrowings of the Central Government

VII.2 Central Government’s Market Loans – A Profile

VII.3 Issuance of GoI Dated Securities – Maturity Pattern

VII. 4 States Market Borrowing

VII.5 Residual Maturity Profile of Outstanding State Development Loans and Power Bonds

VII.6 Utilisation of WMA/OD and Investment of State Governments

VII.7 No. of Days States Availed of Special/ Normal WMA and OD

VII.8 Investments in ATBs and ITBs by State Governments/UTs

VIII.1 Banknotes in Circulation

VIII.2 Coins in Circulation

VIII.3 Currency Chests and Small Coin Depots as at end-December 2011

VIII.4 Indent and Supply of Banknotes

VIII.5 Indent and Supply of Coins

VIII.6 Disposal of Soiled Banknotes and Supply of Fresh Banknotes

VIII.7 Counterfeit Notes Detected

IX.1 Payment System Indicators - Annual Turnover

X.1 Reserve Bank Training Establishments - Programmes Conducted

X.2 Number of Officers Trained in External Training Institutions in India and Abroad

X.3 Recruitment by the Reserve Bank – 2011

X.4 Category-wise Actual Staff Strength

X.5 Staff Strength of the Reserve Bank

X.6 Reserve Bank’s Office-wise Strength of Staff

XI.1 Gross Income

XI.2 Earnings from Foreign Sources

XI.3 Earnings from Domestic Sources

XI.4 Expenditure

XI.5 Trends in Gross Income, Expenditure and Net Disposable Income

XI.6 Contingency and Asset Development Reserves and Surplus Transferred to the Government

XI.7 Balances in Currency and Gold Revaluation Account (CGRA), Exchange Equalisation Account (EEA) and Investment Revaluation Account (IRA)

XI.8 Balances in Contingency Reserve and Asset Development Reserve

XI.9 Foreign Currency Assets and Domestic Assets

XI.10 Foreign Exchange Reserves

XI.11 Investments in Shares of Subsidiaries/Associate Institutions