Rising oil prices and firming up of global and domestic food prices are likely to have a significant impact on inflation outlook in 2011, a top RBI official said.
The Finance Minister himself admitted that the tax proposal could have some inflationary bearing.
Country's central bank has been vocal on the build-up of the fiscal deficit.
The Reserve Bank of India (RBI) may consider measures to deal with foreign institutional investor (FII) inflows, which are emerging as a potential threat, said the central bank's Deputy Governor, Subir Gokarn, in Mumbai on Tuesday. His comments came a day after Finance Minister Pranab Mukherjee said there was no need for restrictions on foreign inflows, in an interview with a television channel.
Select bankers will meet RBI Deputy Governor Subir Gokarn, who is in-charge of the monetary policy department, and other central bank officials on July 12.
Most of the Asia-Pacific economies would be cushioned by healthy foreign exchange reserves in the last quarter of the current calendar year, global ratings agency, Standard & Poor, said in a report.
The upheaval in domestic markets that followed the US economic downgrade notwithstanding, RBI on Friday said the liquidity in the Indian banking system was not under stress and the central bank was monitoring the situation closely.
Though the index of industrial production expanded 11.7 per cent in November, the Reserve Bank of India sees the recovery still skewed and says the uneven recovery would dominate the central bank's thinking.
Along with Subir Gokarn's appointment as the fourth deputy governor, the Reserve Bank of India on Wednesday reshuffled some of the key portfolios of its deputy governors and executive directors.
To a question on the latest Index of Industrial Production Data, RBI Deputy Governor said concerns had been raised about IIPD for sometime now.
The collapse of Lehman Brothers was clearly a point of inflection, in which the rate of decline of the financial system accelerated sharply and its impact on the global economy intensified. In retrospect, it could have been any one or more of the global financial institutions to precipitate the collapse.
The Indian Rupee is the fourth most depreciated currency in the world and most depreciated in Asian continent.
Containing high food prices is a dominant policy concern, the Reserve Bank said on Tuesday, amid expectations that it may raise short-term borrowing and lending rates next month.
He based his optimism on hedging tools available.
Economists and experts have suggested that the central bank should intervene in the Indian forex market to halt the sharp depreciation in rupee value.
The government's decision to put on hold even limited cuts in ration shop entitlements spells trouble for any future attempts to target subsidies.
The Reserve Bank of India on Thursday said the Greek debt crisis would not change its roadmap to exit from the accommodative stance, as the central bank has already factored in the impact of global uncertainties in its exit-policy.
The roads in India is a powerful stimulant to rural employment. It will have a strong multiplier effect on the local economy, says Subir Gokarn.
The Reserve Bank on India on Thursday said that high inflation, primarily driven by food prices, has begun to spread to the broader economy now, but it is likely to ease in the coming months on the back of an expected moderation in food prices with the arrival of fresh crops.
RBI depty governor Subir Gokarn stopped short of giving a new estimate, saying the recovery was mainly driven by government spending and it was premature to forecast without knowing the impact of the monsoon on the third quarter figures.
Rating agency Crisil on Friday said growth rates witnessed in the current fiscal in several sectors are expected to continue for 3-5 years, even as it predicted rising wages in the information technology sector by 2007-08.
The economy is expected to grow by 6.75-7 per cent during 2005-06 and inflation is likely to hover around 5-5.5 per cent, rating agency Crisil said on Friday.
Rajan was expected to join the search committee to appoint three external members of a new six-member RBI Monetary Policy Committee
Here is some background on the candidates seen as potential successors to Rajan at the RBI
Traditionally, Prime Minister picks the RBI Governor after consultation with the finance minister.
The RBI will have to focus on constructive change to ensure growth.
FII's too have invested in huge amount in the country
Panagariya, who heads the government's main economic advisory body NITI Aayog, is also India's Group of 20 summit negotiator
The appointment will be made by Prime Minister Narendra Modi in consultation with Finance Minister Arun Jaitley.
'It is far too early to celebrate the numbers.' 'They are still fairly weak compared to the pre-pandemic level.'
Modi will also need to reconcile market demands with those from forces within his own administration
Duvvuri Subbarao recounts how his tensions with P Chidambaram and Pranab Mukherjee, then finance ministers, over monetary policy spilled over into other issues in the central bank in this excerpt from Who Moved My Interest Rate?, his memoir of his term as Reserve Bank of India governor.
The post-crisis debate on capital account management focuses on matching instruments with vulnerabilities.
"We did not abuse RBI governors," says Chidambaram.
In his book, former governor Subbarao says Chidambaram, Pranab were piqued by his tight rate policy.
The data-generation ability of technology can not only provide real-time feedback on its return on investment but also evaluate education programmes.
Chidambaram has been magnanimous in endorsing my book, says the former RBI Governor D Subbarao.
Experts will give their inputs for Budget.
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