"The monetary policy is independent of the central government. The question of postponement of the policy announcement does not arise," an RBI source said.

This is one of the rare instances when the central bank will unveil its credit policy with uncertainties looming large over the fate of the Finance Bill.

RBI governor Bimal Jalan had presented the monetary and credit policy for the first half of 1999 ahead of the presentation of the Union budget last year. "There have been instances of RBI presenting its credit policy before the budget. However, this will be a unique instance where the credit policy will be announced against the backdrop of a budget which has not yet been passed. This will substantially dilute the stance of the policy," banking sources said.

Senior bankers feltwith the fall of the Vajpayee government, the pressure on the central bank to cut interest rates will ease and the central bank is unlikely to announce any cut in bank rate or banks' cash reserve ratio (CRR) in its forthcoming credit policy. The focus, instead, will be on structural issues.

The finance ministry has been pushing for an interest rate cut since the presentation of the Union budget. The RBI had cut the bank rate, repo rate and CRR immediately after the budget which forced most of the public-sector banks to bring down their prime lending rates. I-Sec, the investment banking arm of ICICI, ruled out any CRR cut in the forthcoming policy. "We expect the main thrust of the credit policy will be on structural issues," I-Sec said.

"Added uncertainty due to the status of the current proposals would alter the pace of government expenditure. Till such time a `stable' Government assumes at the Centre, forex volatility would remain a continuing concern to the central bank. We believe that a CRR cut ismore likely at a later date when market liquidity is further strained to support the fiscal excesses of the Government," the investment bank said.

According to Investment Research and Information Services (Iris), "The major emphasis of the policy will be on consolidating the wishlist of structural changes that were desirable in the mid-year review of the monetary policy announced in October 1998. The policy will try to abstain from micro-tinkering with interest rates."

The finance secretary recently admitted that the finance ministry had no business to meddle with interest rates: "Interest rate policy is the domain of the RBI and I can see what problems the governor faces." This also effectively puts to rest speculation that the finance ministry may force the RBI to undertake another round of interest rate cuts.