The strengthening of economic activity in the recent years has been supported by persistent increase in gross domestic investment rates from 23.0 per cent of GDP in 2001-02 to 30.1 per cent in 2004-05 coupled with more efficient use of capital. Gross domestic saving rate has also improved from 26.5 per cent to 29.1 per cent during the same period.
The saving-investment balance in India is in a desirable range thereby contributing to global stability also. Facilitated by reforms, financial markets have become freer and institutions more independent operationally. Monetary policy has gained more operational autonomy with discontinuation of automatic monetization of deficits since 1997 and Reserve Bank's withdrawal from primary gilt auctions from this financial year, combined with increasing reliance on indirect instruments.