Mr Y Venugopal Reddy head of RBI said that India's financial sector is likely to be less affected than similar sectors in most emerging economies by the turbulence in global financial markets.

Mr Reddy said that "The money, government securities and foreign exchange markets have been stable in India and, in our view, they may not be vulnerable in terms of direct and first round effects."

Mr Reddy also said that domestic output and prices are under pressure due to high global prices of food, fuel and metals and the turbulence in the financial markets.