This is particularly reflected in the stability of the political system, which, in turn, has contributed to macroeconomic stability and sustained growth. Turning to the outlook, growth prospects  BIS Review 55/2007  5  of Indian economy have strengthened considerably and appear well entrenched to build on the current momentum.
The overarching policy challenge at this juncture is to manage the transition to a higher growth path while containing inflationary pressures. The Reserve Bank’s policy endeavor would be to contain inflation close to 5.0 per cent in 2007-08 and in the range of 4.0-4.5 per cent over the mediumterm with a view to maintaining self-accelerating growth.