However, from 1995 to 2000, the WPI was still used in National Income Statistics, and the improvement in quality and productivity due to technological innovation was not captured as well as it has been since 2000. If the increase in productivity were substantial during this period, the potential growth rate would be understated.
A Liquidity Adjustment Facility (LAF) has been introduced since June 2000 to precisely modulate short-term liquidity and signal short-term interest rates. The LAF, in essence, operates through repo and reverse repo auctions thereby setting a corridor for the short-term interest rate consistent with policy objectives. There is now greater reliance on indirect instruments of monetary policy.