These factors together strained the external and fiscal deficit that rose to 3.9% and 4% of GDP, respectively in FY06. While these deficits have been financed properly as Government’s realization of tax collection and external debt flows were supplemented by significant growth in non debt foreign inflows following the sale of state assets and  BIS Review 3/2007  1  FDI.
Therefore, it is not so much by changing their very short-term interest rate instruments that central banks can impact the decisions that matter most for the economy. It is rather by influencing expectations about the evolution of those short-term interest rates in the predictable future.