Larger deficit reductions in 2007-08 and 2008-09 will be required to meet the FRBM targets. As the Reserve Bank in its latest Annual Report has observed, adhering to the FRBM targets in respect of fiscal deficit and revenue deficit is critical for macroeconomic, financial, external sector and budgetary sustainability.
Graph 5  Lending Standards With that background, I want to turn to an issue that has attracted a fair bit of attention in recent months – the role that tightening lending standards might have played in the downturn in credit and the housing market.