There is need for continued caution on the price front and this would require a moderation in monetary expansion consistent with the expected real growth. There is also the need for developing the Bank Rate as reference rate to signal policy stance of the Reserve Bank. This would require rationalisation of the interest rate structure and linking of interest rates to the Bank Rate.
There is an urgency to step up the flow of bank credit. This would need streamlining and improving credit delivery system by giving greater freedom to banks. Besides, banks must endeavour to bring down the interest rates by reducing the spreads. The money, foreign exchange and government securities markets need to be further developed and integrated. 8.