Government to pay disproportionately high interest for borrowings from savings, overturning a nearly two-decade-long process of reforms in the management of public debt.
India's overwhelming dependence on imported energy will remain a significant weakness.
The rupee came under pressure on demand from importers as the dollar strengthened overseas.
Reserve Bank Governor Raghuram Rajan on Tuesday said the government's target of reducing the current account deficit (CAD) to $70 billion or 3.7 per cent of the GDP in 2013-14 is "imminently reachable".
The idea of strategic disinvestment seems to have been dropped by the government.
India's manufacturing sector activity contracted for the second consecutive month in September as both output and new orders witnessed a decline, an HSBC survey said.
Based on the estimate, a courier bringing in 1 kg of gold currently worth around $40,000 at world prices could earn $470 if not caught.
In his first monetary policy review since taking office on September 4, RBI Governor Raghuram Rajan increased the repo rate by 25 basis points to 7.50 per cent.
The Prime Ministry's Economic Advisory Council Chairman also said fiscal deficit is a concern too and suggested raising domestic oil prices to restrict it to the budget target of 4.8 per cent of the gross domestic product in this fiscal.
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In the global market, the US dollar rose against the basket currencies in early trade as US President Barack Obama called for diplomacy in dealing with alleged chemical weapons attack in Syria but kept open the possibility of military action against the Assad regime.
CPI-based inflation on a (year-on-year) basis has come down from 8.59 per cent in April 2014 to 7.80 per cent in August 2014.
The government has taken a number of steps to stem the depreciation of rupee including moderation in demand of non-essential imports and enhancing supply of capital flows, Finance Minister P Chidambaram said.
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Gold prices have eased off in recent months after the formation of a new government bringing in positive sentiment back to the stock market.
To do so, the government will have to tackle a number of broad development challenges successfully, says Shankar Acharya
The Finance Ministry on Thursday said the growth rate in the current financial year will accelerate to 5.8 per cent, better than previous estimates, saying the green shoots of economic recovery are now visible.
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The Reserve Bank is scheduled to unveil its first quarter review of the monetary policy on July 30.
If we don't take the fiscal deficit seriously, then it could easily widen and harm our future growth
The repo rate has been unchanged since January, when the RBI increased it by a quarter percentage point.
Out of 389 SEZs notified, 170 are operational, Export Promotion Council for export-oriented units and special economic zones (EPCES) said in a statement.
Expressing serious concerns over the current account deficit touching a record 4.8 per cent in 2012-13, India Inc on Thursday asked the government to take all policy measures, including boosting exports and foreign exchange inflows to bring down CAD.
Blames govt for raising fiscal deficit by financing consumption-based subsidies rather than focusing on infra.
The policy statement by the RBI governor is also expected to be upbeat.
The RBI has enough "fire power" to deal with the rupee volatility and will intervene in the forex market as and when required, said Planning Commission Deputy Chairman Montek Singh Ahluwalia.
From inflation, central bank shifts focus to rupee stability and capital flows.
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Gold prices on Tuesday rose by Rs 227 to Rs 28,418 per 10 gm in futures trade, largely on speculative positions created by participants amid a firming trend at the spot market.
The central bank said on Monday that the country's stubbornly high fiscal deficit and uncertainties arising out of the war in Iraq posed risks to growth.
The brokerage firm cautioned that there is a possibility of further downside risks to growth, especially in the near term as RBI's policy interest rate cuts in recent months has not been translated into reduction in bank lending rates.
Honest tax payers need not worry about the new black money law, says finance minister Arun Jaitley.
The RBI, in its last policy statement, had mentioned that 'headroom for further monetary easing remains quite limited' due to risks on account of the current account, and pressures on inflation.
According to a RBS report, 'the impact on India's current account deficit should be significant, cumulatively amounting to 1.9 per cent of GDP' provided for the full year FY14 prices for both oil and gold remain at current levels and aggregate volume gold demand remains stable.
Current account deficit could ease to around 3 per cent in the current fiscal year from prior estimates of about 4 per cent due to sharp drop in global commodity prices.
RBI had reduced the key policy rate, the repo, in consecutive policy meets, in January and in March, by 25 basis points each.
Bold reforms and prudent monetary and fiscal policies by the incoming Narendra Modi government will help the economy to grow at 6.5-7 percent, says a report.
India Inc on Tuesday welcomed the 0.25 per cent interest rate cut by the Reserve Bank saying it would help revive confidence of industry and hoped for further cuts in the coming days.
As per SIAM data, the total sales of vehicles across categories registered a decline of 5.45 per cent at 14,51,278 units in February 2013 as against 15,34,910 units in the same month of 2012.
RBI on Tuesday slashed short-term lending rate by 0.25 per cent to 7.5 per cent, which the bankers read as not enough for an immediate cut in their lending rates.
Seeking to dispel fears over the state of economy, Finance Minister P Chidambaram on Thursday said the country will return to high growth of 7 per cent in two years and promised adequate public spending to stimulate it.
Says govt's focus is to re-assure foreign investors that India is wide open for business.
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