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The Indian national flag and the national emblem Ashok Stambh atop the Vidhan Soudha in Bangalore. | Photograph: Dibyangshu Sarkar/AFP/Getty Images
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Milestones mark Chidambaram's tenure as FM

December 1, 2008

Record flow of capital meant increase in money supply that put upward pressure on inflation. India's central bank responded by tightening its monetary policy by increasing key rates like repo rate (the rate at which the central bank lends money to the banks) from 6 per cent to a peak of 9 per cent.

The RBI also increased the cash-reserve ratio from 4.5 per cent to a peak level of 9 per cent to suck money out of the system.

These rates, however, were brought down in the last few months as the economy faced a liquidity squeeze in the wake of the global financial turmoil.

Image: The Indian national flag and the national emblem Ashok Stambh atop the Vidhan Soudha in Bangalore. | Photograph: Dibyangshu Sarkar/AFP/Getty Images

Also read: Crisis: How will key sectors perform?
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