The Reserve Bank expects agriculture growth to be 'normal' this fiscal and stuck to its average annual inflation target of 5-5.5 per cent for 2005-06 despite the high global oil prices.
The central bank also sees no pressure on interest rates, as there was ample liquidity in the banking system, RBI Deputy Governor Rakesh Mohan said on the sidelines of a conference on pension organised by Invest India Economic Foundation in New Delhi.
Though interest on deposit rates were hiked by some banks, he said it was up to banks to decide on the lending rates in response to the market condition.
Asked whether normal to good rainfall would push up farm growth as well the overall economic growth, he said: "We have a normal monsoon and have a normal agriculture growth."
In its slack season credit policy, RBI had pegged GDP growth at 7 per cent for 2005-06 backed by 3 per cent growth in farm output and sustained high growth in industry and services sectors. GDP growth was estimated at 6.9 per cent last fiscal on the back of 1.1 per cent growth in farm output.
On inflation, he said the central bank was constantly watching the global oil price trends, but RBI would stick to its assessment on inflation as of now.
Mohan did not like to comment on whether the wholesale price index based inflation has bottomed out. The weekly WPI-based inflation was at 3.53 per cent on September 10, marginally higher than 3.16 per cent a week ago.
In its April policy, RBI had pegged inflation at 5-5.5 per cent for the fiscal year and has not changed its forecast even though global oil prices have gone up significantly to about $67 a barrel now. Domestic fuel prices have been increased twice since April.
