The credit penetration, as measured by the ratio of bank credit to the NSDP, in NES also remained significantly lower than the all-India level (Chart 1). This raises the question as to whether low credit penetration in NES was due to lack of absorptive capacity in the region.
In the last quarter of 2007–08, the 5-year (10-year) WPI inflation expectations at 5 per cent (4.5 per cent) was aligned to the Reserve Bank’s comfort level. The consumer price (CPI-IW) inflation expectation was slightly higher at 5.5 per cent (5.0 per cent). With the persistence of near double- digit inflation in 2010 and 2011, the medium- and long-term inflation expectations have risen.