INDIA'S RBI TO REASSESS GROWTH RATE IN OCTOBER.

MUMBAI, Sept 2 Asia Pulse - The Reserve Bank of India is to re-assess the projected growth rate of 6-6.5 per cent for 2002-03 in October by which time reliable information on effects of drought on agriculture and industrial output will be available.

The growth rate, projected in the monetary and credit policy, was based on the assumption of a normal monsoon and on the basis of current indications the growth rate is likely to be lower, RBI said in its annual report for 2001-02.

On the one hand financial, liquidity, inflationary and external conditions were highly favourable for higher growth, while on the other the agricultural outlook was sombre with the likelihood of widespread drought, the report said. RBI said this may also adversely affect the incipient industrial recovery unless countervailing and timely measures were put in place to accelerate the pace of industrial investment and economic reforms.

While the uneven progress of monsoon was a cause of concern, there was no reason for undue alarm in respect of macro-economic stability, given the in-built resilience of the economy, it said adding that on the whole the macro-economic prospects for 2002-03 were mixed.

In view of drought conditions reported in some parts of the country, inevitably the affected state governments would have to step up expenditures in identified areas, while the federal government would also be required to provide necessary support.

the RBI reiterated that fiscal empowerment, by ...