When Reserve Bank of India (RBI) governor D. Subbarao reads out the mid-term monetary policy statement, concern about inflation, which dominated monetary and fiscal policy measures in the last one year, is likely to have been replaced by worries about economic growth.

A confluence of recent developments, such as a slowing economy, a cash and credit crunch and declining oil and commodity prices, has led to the change and left economists and bankers unfazed about the Union government’s expanding fiscal deficit and borrowing plans.

In the last month, the government has lowered its forecast for this fiscal year’s economic growth. Simultaneously, other organizations making forecasts have also marked down economic growth, often by a bigger magnitude than the government.

The economic slowdown is expected to compress the economy’s aggregate demand, a measure that was the RBI’s target all year through monetary policy measures to rein in escalating prices.