Reserve Bank of India [Get Quote] Governor D Subbarao on Thursday said in view of "significant" economic crisis, RBI and the government would have to take "significant" measures, even as the apex bank was ready to take swift and effective action, as and when required.

Addressing a press conference after the the central board of RBI met in Kolkata on Thursday, Subbarao said: "The situation in the way forward is uncertain because the global situation is uncertain. It is not possible to calibrate the precise road map of what we will do and when, but RBI will take swift and effective action, as may be required."

He further said, "We believe the economic crisis is significant, and significant policy actions are called for from the government and RBI."

Yesterday, Subbarao had termed the present and the next financial year as "difficult years", and had said the economic growth projections for the current year may be revised downwards.  "The situation demands actions, both on the fiscal and the monetary sides. Both the government and the central bank are acting in coordination," the RBI governor said.

Subbarao also said the buyback of Market Stabilisation Scheme securities (MSS) will be calibrated with the government borrowing programme.

"We have calibrated the MSS unwinding in accordance with the government borrowing programme," he said. The government will borrow another Rs 45,000 crore (Rs 450 billion) through bonds in the remaining part of the current financial year.

"It is our expectation that banks will respond to the cut in the repo rate by  reducing the lending rate and keep lending to productive sectors. It is our expectation that banks will cut the lending rate," Subbarao said.

The central bank will review the inflation and GDP growth projections in January.

"Momentary policy actions, we have taken, have resulted in some positive outcome. All the measures of liquidity are appropriate." the governor said.

Later Usha Thorat, deputy governor, RBI, at an interactive session at the Indian Chamber of Commerce said, in view of the present economic crisis, banks and borrowers need to adjust the rate of interest.   

"Difficult challenges are there and bankers and borrowers need to work together," she said.

The deputy governor said the fundamentals of the Indian economy are strong as the economy is mostly dependent upon domestic savings and consumption. However, in recent months, cash crunch has put additional pressure on banks.