RBI today released its annual report for 2011-12 fiscal that ended on June 30. Attributing economic slowdown to a combination of domestic and global factors, the report says that the investment climate has worsened due to structural impediments, policy uncertainties, inflation persistence and rising interest rates.

To reverse the trend, RBI has asked the government to fast-track infrastructure projects and speed up regulatory clearances that will help to boost investments. RBI has said that investment climate in power sector has been affected by State Electricity Board losses and coal supply shortages. It advises the government to resolve all pending issues in respect of proposed new Fuel Supply agreements and resolve coal block auction without any further delay.

In the report RBI has said in order to step up public capital expenditures, the government needs to cut expenditure on subsidies. It adds that with limited fiscal and monetary space available to provide a direct stimulus, an expenditure-switching policy is needed.

RBI has said that financial inclusion is a substantially unfinished agenda and efforts need to be upscaled to reach out with a human face. RBI has also advised corporates to maintain integrity and be more competitive.
Defending its tight monetary policy stance, RBI said that although it has contributed to growth deceleration but was essential to maintain price stability and to lower inflation.