As per the Union Minister for Agriculture, India's wheat production is expected to surpass last year's record 94.88 million tonnes due to better yields from Punjab, Haryana, Western Uttar Pradesh and Madhya Pradesh. In the ensuing procurement season, which begins in April, Punjab and Haryana are set to procure an all-time high of 227.30 lakh tonnes of wheat. As per Agriculture Ministry statistics released on 1 March, rabi crops have been sown on 631.67 lakh hectares against 629.86 lakh hectares a year ago.

The new financial year 2013-14 has begun on a worrisome note as the overshooting of current account deficit at 6.7% of GDP for the third quarter of fiscal 2012-13, have ruined the RBI’s efforts to stimulate dwindling growth by easing policy rates. In the meanwhile, disappointing data from IIP growth at 0.6% for February 2013 and subdued vehicle sales point to a sharply weakening economy. However, the modest ease in inflation brightened the prospects for interest rate cuts ….

The RBI continued its monetary easing by reducing the repo rate by 25 bps to 7.5% on 19 March in its latest policy review. Following the reduction in key policy rate, the money market operations relieved to some extent, since the banks borrowing increased drastically ahead of financial year-end cash requirements. The liquidity condition of banks tightened and was evident from the high amount of LAF repo auctions as well.

The Reserve Bank of India has at last reduced its discount rate at which it repurchases government securities from the commercial banks, the repo rate. The reduction, however, has been very small and has come very late. In pursuit of a notion of central bank independence, the RBI has taken steps that have contributed to a decline in investment and a slowdown in growth. It is time the central bank accepts once again that one of its main roles is to maintain the fl ow of credit to the productive sectors.

In the post-reform period, RBI's channel of communication has widened to a wide array of publications such as quarterly macroeconomic reviews, monetary policy statements and reviews every other month and speeches and statements from top management. Still, the Annual Report continues to be the major channel of communication from the RBI, particularly for airing its independent views on macroeconomic developments and policy.

There are dark clouds on the external sector front. The current account defi cit touched its widest ever level in 2011-12, foreign exchange reserves are increasingly providing import cover for a shorter and shorter period and the ratio of volatile capital to reserves is rising.

The annual rate of inflation as measured by wholesale price index continued to show a decline for the third year in succession and touched 5.96% in 2012-13. Though all the three major commodity groups recorded price increases during the year 2012-13, the relatively lower rate of increase in manufactured products at 4.07% compared to primary articles (7.60%) and fuel and power (10.18%) contributed to the overall decline in the inflation rate during that year. The inflation rate of foodgrains jumped to 16.76% in 2012-13 from 5.69% a year ago.