Reserve Bank of India Governor Y V Reddy said that the 17.6 per cent growth in non-food credit offtake during 2003-04 was fuelled by the housing and retail sectors.

While there was a slack in credit offtake during the first five months of the fiscal, it expanded vigorously in the subsequent months with Rs 1,19,684 crore (Rs 1196.84 billion) incremental credit being made available during 2003-04 compared to Rs 99, 448 crore (Rs 994.48 billion) a year before.

Giving an update of the Indian economy, Reddy said, the bank credit to the priority sector showed an increase of Rs 33,720 crore (Rs 337.2 billion) or about 16 per cent in the first 10 months of 2003-04.

It increased by 33 per cent for housing and by 25 per cent for the infrastructure sector. The governor was here to release a book "Accelerating growth and poverty reduction" by Icrier Director and Chief Executive Arvind Virmani.

Reddy said that India's balance of payments position remained comfortable despite widening of the trade deficit. Notwithstanding the near doubling of the trade deficit to $ 15.5 billion during the first 11 months of 2003-04, the current account remained in surplus due to robust invisible earnings, he pointed out. In the first three quarters, the current account surplus was $ 3.2 billion, higher than $ 2.9 billion in the corresponding period a year ago.

He said that the capital inflows too continued to be robust. "In the recent period, reserve accretion has been largely reflecting both comfortable liquidity prevalent in the global economy and the underscoring of confidence by the international community in the Indian economy," Reddy said.

The financial markets too were generally stable, he said, pointing out the decline in the call money rate to 4.3 per cent by end-March 2004 from 6.3 per cent in end-March 2003. "The overhang of liquidity has largely persisted as a result of continued capital inflows," Reddy said.

The Governor said that the recent measures under the liquidity adjustment facility and the market stabilisation scheme would enable the Reserve Bank to improve liquidity management in the system, to maintain stability in the foreign exchange market and conduct monetary policy in accordance with the stated objectives.

Reddy also said that a working group on systematically important financial intermediaries has been set up to look into the monitoring of financial conglomerates with members from the RBI, the Securities and Exchange Board of India and the Insurance Regulatory and Development Authority.